TRIANGULAR PARTNERSHIP: A FRAMEWORK FOR URBAN REVITALIZATION
Masters Thesis: Planning and Community Development, College of Design and Planning, (Jnversity of Colorado, Denver, Spring 1982
A FRAMEWORK FOR URBAN REVITALIZATION by
A thesis submitted in partial fulfillment of the requirement
for the degree of
Master in Planning and Community Development Department of Planning and Community Development College of Design and Planning University of Colorado at Denver
This thesis is written in honor of the people who have dedicated their service to neighborhood organizations in Denver.
The following friends have been particularly supportive, insightful, and wonderful throughout the writing of this thesis. I thank:
Erich Hill, for his peculiar humor, hooters and all, special friendship and assistance in the thesis graphics.
Johnnie Jones, for her encouraging words and day by day attention to working with me on the thesis, even on Sunday morni ngs.
Kathy Lundberg, for working so diligently on the final copy of
the thesis and continuing to be a friend throughout it all.
The Neighborhood Partnership, for the political insights they provided
concerning neighborhood organizations in Denver.
Chad Roark, for his imaginative graphic work and friendship.
Martin Saiz, for his thoughtfulness and for helping me on so many projects throughout my days in the Pits Office.
T. Michael Smith, for his insights on how to approach the thesis and
enthusiastic support for the community development process.
C.K. Wilson, for providing recent photographs of Baltimore which added the important visual background to the Baltimore Case Study.
Dr. Who, Romana, K-9, for many Sunday mornings of adventure on foreign
planets which gave me the energy to write the thesis.
A Special Acknowledgement to the late Mark Murphy, who inspired his students with his love of people, curious mind, and sharp wit.
CASE STUDY REVIEW: INTRODUCTION
Pub!ic-Private Partnerships have existed informally between city
governments and the private sector for many years. Public-Private
Partnerships can generally be defined as:
...concerted activities jointly undertaken by government and business to solve community problems in a way that yields benefits to both the firm(s) and the community at large.
(Redef., Public-Private Partnerships : 1982: p-i).
There are many types of public-private partnerships which fall under this general definition. A premise of the thesis is that neighborhood development organizations should participate in these partnerships along with the local government and private sector partners. Because the CBD and adjacent neighborhoods are economically inter-related, neighborhoods need to be actively involved in partnerships projects. Effective urban revitalization needs to address the problems of the City Center and urban neighborhoods as a whole. In order to understand neighborhoods, neighborhood leaders need to be involved in the partnership. When research organizations studying public-private partnerships were asked how many partnerships involved neighborhoods to this degree, it was agreed that very few partnerships involved neighborhood partners on an on-going basis in policy and project development. (Phone Survey: 2/82 4/32).
The case study section begins with a review of a representative Public-Private Partnership between city and private business groups. The Baltimore, Maryland partnership will be analyzed to show typical characteristics of a traditional partnership between the local government and
private sector. Certain partnerships have taken innovative steps to include neighborhood organizations in addition to the traditional partners. Portland, Oregon will be studied because of the high degree of community involvement in all phases of the project. Flint, Michigan provides an example of how two neighborhood development organizations participated directly in the financing of a large downtown development project.
The case study analysis will try to determine what factors made each partnership project successful. A concluding summary will compare the case studies to each other to determine if there are factors common to each project which facilitate the success of a partnership project. The conclusions from the case studies will provide the criteria for analyzing the following section on Denver. Colorado's potential to develop a Triangular partnership including neighborhoods, the local government, and the private sector.
CASE STUDY: Baltimore, Maryland
PROJECTS: Charles Center
The Baltimore Partnership is ar. example of public-private cooperation which has existed for over 30 years. This case will examine how the par-nership concept has evolved over time by reviewing the Charles Center and Inner Harbor developments. Baltimore has been praised by the media for its efforts to make the city an exciting place for people to live and visit. Baltimore's leadership in the public and private sectors is considered to be the factor which has made pub!ic-private cooperation effective. The analysis will focus on how the often divergent interests of the public and private sectors were combined to form a strong- leadership base for the city.
Introduction to Baltimore
Baltimore, an old industrial city, "is a blend of Southern charm and Northern industry". (Berger 1982: p.2) Recently, Baltimore has received
publicity for its major urban revitalization projects, Inner Harbor and Harbcrplace. Located 35 miles north of Washington, D.C., Baltimore is "coming into its own as a revitalized port city". (Berger 1982: p.2)
The city is a regional center for many manufacturing enterprises such as Bethlehem Steel, shipbuilding yards a General Motors assembly plant, Norell Corporation, Bausch and Laumb, Westinghouse, and Black and Decker. (Berger 1982: p.2) Baltimore's economy is well diversified. Service
and public-sector employment is on the increase.
Baltimore has distinct neighborhoods with more than one hundred active
The city is
neighborhood associations involved in cerrurnty cff known for its cultural fairs and historic districts an exciting city. The variety of neighborhoods is Baltimore's most valuable urban assets.
which make Baltimore considered to be one of
During the 197C's, Baltimore's population decreased and many businesses moved to the suburbs taking their employment opportunities with them. The City was plagued by increasing inflation and a "fiscal situation that made it increasingly dependent on grants and aid from other levels or government". (Lyall 1930: p.67) The following analysis of Charles Center and Inner
Harbor will show how Baltimore developed a public-private partnership to revitalize the city's economy.
Baltimore's Efforts To Prc
The Citizens Planning and Housing Association (CPHA) was the result of a merger of the Citizens Housing Council and a larger group of professional architects, planners, and university professors. Established in 1941, CPHA served as the first "official" mechanism for directing public attention to the longer term problems of housing and neighborhoods. (Eerger 1982: p.9)
CPHA made many efforts to restructure the organization of the city's
government. CPHA was instrumental in merging the City Housing with the Redevelopment and Housing Agency. In 1958, the City 5 Building Inspection was also combined with BlfRA. The agencies
ureau of are now or-
ganized under the Department of Housing and Community Development (HCD).
By centralizing all the city's development agencies in a single de-
Partment, the process for obtaining permits, approvals, and other reviews was streamlined. The commissioner's position at HCD was filled by Robert Embry, Jr. (9 year term), succeeded by M. Jay Brodie, both CPHA members. William Donald Schaefer became mayor also a CPHA member. As a consequence, Baltimore had individuals in positions of executive power who knew each other and shared many of the same values about housing, redevelopment and neighborhood problems. Also, Embry and Schaefer have served in various public offices for many years. Such a familiar, close-knit group of individuals serving in public offices over many years has created a continuity of purpose within the public sector. CPHA has assisted this process by nurturing leaders within its ranks to hold positions of power directly related to public-private endeavors. Alumni of CPHA provide a broad range of talent and influence within the organization. Currently, CPHA's membership includes 1,300 individual members, 200 business memberships, and 150 neighborhood association affiliates. (Berger 1981: p.16)
CPHA is a United Way agency which prohibits it from unrestricted and direct solicitation of businesses for financial support for projects. The committee system is used to focus on specific issues. This method offers the opportunity for individuals to work on areas of mutual interest without requiring that they commit themselves to policies of the organization. "The single-issue committee structure has proven to be an extraordinarily pragmatic and flexible tool". (Berger 1982: p.18).
The Greater Baltimore Committee (GBC) was the group which made the initial effort to attract business support for revitalization projects. Interest in the organization was secured by members of the Citizens Planning and Housing Association. The Commission on Governmental Efficiency and
Economy had also recently published a report on Baltimore's declining tax-base and predicted that if something was not done in the near future to reverse the trends of decline, the city would be in a shambles.
The business community was failing to provide the essential impetus for change. Instead of adding its weight to new proposals vital to the welfare of the community, it refused to look beyond its own limited, immediate concerns. (GBC 1980: p. 19)
James Rouse, with the support of several other corporate executive officers, made an initial attempt to attract corporate leaders to the GBC. Reactions to the idea were generally very negative.
'Baltimore is not in bad enough shape yet to support that kind of organization.' The local press also greeted the rumors of the new group with skepticism. (GBC 1980: p. 20).
Rouse asked Clarence Miles to call a meeting of 25 of the city's top executives. Miles, a respected corporate lawyer, was recognized by the business community as a man who could get things done. He had negotiated the deal which brought the St. Louis Browns to Baltimore to become the Orioles. Once again, Rouse emphasized the need for the business community to take an active part in the city's revitalization efforts. This time, the organizer's efforts paid off and in January, 1955, the Greater Baltimore Committee held its first meeting with 85 members present.
This example shows how important it is to choose the right type of business leader to attract the corporate community to participate in this type of civic organization. Clarence Miles was described this way: "He was widely perceived as a proven winner, someone with shrewd bargaining
skills and the best interests of the City at heart". (Lyall 1980: p. 53).
The GBC was composed of "the chief executive officers of the 100 largest corporations in the Baltimore metropolitan area who could make decisions without consulting anyone else in their corporations". (Lyall 1980: p. 54). The purpose of the GBC was to represent citizen interests, to provide business and financial expertise for civic projects, and to act on proposals to implement development plans. "Action Now" was their motto.
A list of priority issues was developed by the GBC. The group was organized into a series of subcommittees to study and make recommendations for actions on specific projects. (Lyall 1980: p. 55). William Boucher III was appointed to be Executive Director of the GBC. James Rouse chaired the Urban Renewal Subcommittee which generated support for the Charles Center and Inner Harbor Projects.
Greater Baltimore Committee Master Plan/Charles Center
Charles Center is considered to be Baltimore's first public-private project. The downtown business community became concerned about the decay of the inner city. As a result, in 1957, the Greater Baltimore Committee and Committee for Downtown (from the Retail Merchants Association) contracted with a private planning firm to develop a master plan for downtown renewal. The master plan pointed out that population shifts from the city to adjacent suburbs, physcial blight, and transportation inadequacies were causing the deterioration of Baltimore's Central Business District.
At the same time, the City had been working on a redevelopment plan.
The City plan was doomed to failure because it focused only on housing rehabilitation, while ignoring downtown renewal needs. Secondly, a network of expressways circling the Central Business District connecting to the newly constructed Jones Falls Expressway was proposed to solve the transportation prob lem. Neighborhoods and the Central Business District itself would be slashed by the proposed highways. Neighborhood groups eventually killed the City's plan. The City was left with a proposal which had little public support or financial backing. The City had no choice but to combine its efforts with the Greater Baltimore Committee's plan. The City continued to be concerned about residential revitalization. However, clearly the GBC plan had shifted "the spotlight" from residential slum clearance to the problems of the city's commercial core. (Berger 1982: p. 3)
The GBC plan suggested an incremental redevelopment process. Charles Center was the initial small pilot area project. It was chosen because of its high visibility and potential to attract private capital. The project involved:
...thirty-three acres at the center of the downtown renewal area. In that area would be built private office towers, a theater, a hotel, a retail square, and a Federal Building for which funds had already been approved. The total cost was estimated at $127 million, including 20 million for the Federal Building, 25 million from a public bond issue for land acquisition floated by the City ($17 million of this would be recouped from subsequent resale of the land to private developers), and about 90 million in private development sources. (Berger 1982: p. 34)
It was estimated that the city would lose about half a million dollars in taxes on properties taken by eminent domain, but gain over $2 million per year in new property taxes once the project was complete. This projection turned out to be conservative. (Berger 1982: p. 34)
Charles Center was designated as an official Baltimore Urban Renewal Authority (BURA) project. The GBC organized a committee to oversee the project which included private businessmen, the Mayor D'Alesandro and businessmen such as Walter Sondheim, Jr. a top department store excutive and chair of the Urban Renewal and Housing Authority, Martin Millspaugh Assistant Commissioner of the U.S. Urban Renewal Administration, William Boucher III -Executive Director of the GBC, and J. Jefferson Miller a department store executive. The city managed land acquisition and site clearance. The private sector located developers capable of taking on the project and possible tenants for the office building. In addition, the business sector was responsible for raising $90 million in private investment funds. Public and private funds were never combined in any individual investment.
During the project's implementation, it became clear that the two sectors work in different ways. The public and private sectors work under different circumstances which should be understood by both groups. Michael Blumenthal, former Secretary of the Treasury and past president of the Bendi Corporation, remarked in "Fortune" magazine:
...a government bureaucracy, in terms of structure is the opposite in many ways from a private bureaucracy.
A government bureaucracy, in terms of work load, is an inverted pyramid...the people at the top do most of the work and have most of the pressure and cannot delegate.
In business, you work hard at the top, but you can dele-
gate...the tests of efficiency and cost effectiveness, which are the basic standards of business, are in government not the only -- and frequently not even major --criteria. In business, the directors and the shareholders essentially have a common interest...the Congress' (or city council's) interests are much more diverse. Business is simple to succeed in if you follow a few simple rules. Government is harder...the principles of the top manager are the same, but they do not lead to success in government as surely as they do in business...To move within the process and still come out with the right decision is the essential difference between what you do as a senior executive in the government and what you do in business. (Blumenthal 1979: pp. 36-50)
These different approaches to the operation of the public and private sectors should not be allowed to hinder the functioning of a public-private partnership. What is important to recognize is that leadership skills in one sector may not necessarily be appropriate to the other sector.
The following examples illustrate the many unexpected problems that can arise during a public-private development. The private sector is not a monolithic organization. Instead, it is composed of many types of businesses which do not have an agreed upon method for coordinating their interests .
C & P Telephone Company and the Baltimore Gas and Electric Company were reluctant to commit themselves to future investments in corporate headquarters in Charles Center. This reflects the fact that businesses have interests in different markets, and varying degrees of flexibility within their executive management. Secondly, a national competition was held for the design and construction of One Charles Center, an office high-rise. Metropolitan Structures Corporation with Mies van der Rhoe, and the Blaustein
Team with Marcel Breuer, competed for the contract. Metropolitan Structures won. However, the Blaustein design team proceeded to build a second tower just across the street from One Charles Center. Luckily, both buildings were occupied. Within a year, the city had received more property taxes from the office buildings than it had previously received from the entire Charles Center area. (Berger 1982: p. 37)
The public sector also had its share of bureaucratic problems with the Federal Building. The House of Representatives,
which had approved the original funding, subsequently killed a leaseback provision under which the government would have leased the structure from a private operator, and required direct purchase instead. The leaseback was...crucial to the financial viability of the building...it would enable the city to continue to collect real estate revenues on the property; but a federally owned building would be tax exempt.
(Berger 1982: p. 38)
Long negotiations took place with Franklin Floeke, head of the Government Services Administration. Eventually, the Federeal funds were obtained and the building was completed in 1967. Charles Center had become a reality. By 1973,
The Morris Mechanic Theater, the Baltimore Gas and Electric Addition, the Hilton Hotel, Mullen Towers, the Center Plaza, overhead pedestrian walkways, and underground parking garages had been completed. (Berger 1982: p. 38).
By the mid-1960's, it became clear that public investment was going
to be needed to attract private financing for the Inner Harbor plan for
mixed-income housing, office building, cultural facilities and waterfront recreational developments. The purpose of this proposal was much more en-compasing than the concept of Charles Center. Inner Harbor proposed to improve, in general, the working and living conditions for people in the downtown area.
As in the Charles Center Project, a development plan titled "The Inner Harbor Concept" was completed in 1964. The GBC Committee, Committee for Downtown, and City Planning Commissions were responsible for the plan. A series of projects to be completed in two phases were outlined:
o City government mall, to include the Maryland Port Administration's World Trade Center Tower.
o 3,700 new downtown housing units.
o Expansion of Charles Center southward to include 60,000 square feet of new office space.
o Recreation/Tourist Attractions: marine, Maryland Science Center, theater.
o New campus for Baltimore Community College, cultural facilities, and around 55 acres of parkland.
(Berger 1982: p. 40).
The cost of the project was estimated to be $270 million over thirty years. The initial breakdown of funding sources included $180 million in Federal funds, $58 million of city resources, and $22 million in private investments. As of 1982, $44,000,000 of public money has been allocated to acquire and clear land to attract private investments.
The public funds include Federal Grants amounting to $35,000,000 and $20,000,000 in City bond issues approved by the City voters in 1966, 1972, and 1976.
(Inner Harbor Summary and Fact Sheet: 1982)
Over the last 20 years, eleven City bond issues on behalf of Inner Harbor have been approved by the voters.
Charles Center/Inner Harbor Management was contracted by the City to manage the project. Charles Center/Inner Harbor Management is an organization that business people can relate to and at the same time relate to city government. "It has an interchangeable role to act as an advocate for the city with developers and as an advocate for developers with the city. (Davis, 4/26/82) J. Jefferson Miller served as Chairman of the Board and Martin Millspaugh as President of the corporation. Management responsibilities included land acquisition, site preparation, and the packaging of development deals. The corporation is quasi-public and non-profit.
Charles Center/Inner Harbor Management (CC/IHM) provides the city with skills and experience needed for large commercial developments but not normally found in the civil service ranks. It operates within a framework established by the mayor and the Deparment of Housing and Community Development; unlike a city agency which has a permanent function, CC/IHM provides a specialized service to the city on a contractual basis. The city advances the corporation money on a monthly basis, through which the corporation pays its own expenses. The total cost to the city...has been less than 2% of the total public funds involved. The city's capital investment has been paid out of ten local bond issues approved by voters and appropriated for the realization of individual projects. (Brambilla 1979: p. 55).
Initially, the public did not respond enthusiastically to the Inner Harbor proposal. Much of the opposition was due to the lack of public involvement in the process for developing the proposal. Once again, the expressway ring concept angered neighborhood residents. Little Italy, the historic Federal Hill, and Fells Point neighborhoods would be most affected by the proposal. The idea of "super blocks" devoted to specific
purposes was also received coolly. The "mall of governmental buildings" was criticized by the general public as well as government officials.
Nevertheless, the project proceeded. Federal funds were received in 1968. Voters approved a $5.7 million bond issue for the community campus and HUD provided an additional $7.9 million in grants to the city. (Berger 1982: p. 451
Developers become interested in the project. The public waterfront was the initial development attracting private investment. By the mid-19701s, there was also "substantial private investment in the residential neighborhoods". (Berger 1982: p. 45) On July 2, 1980, Harborplace, similar to Quincy Market in Boston, opened with a much publicized celebration. The Harborplace development includes two glass enclosed pavilions which feature open air produce markets, restaurants, clothing boutiques, craft bazaars, and gift shops. A recent issue of "Time" devoted its cover story to Baltimore's revitalization efforts. So far, the city appears to be dealing reasonably well with the risks of large scale development.
Factors Which Made the Charles Center and Inner Harbor Successful Public-Private Partnerships
A review of the two public-private projects illustrates an evolution of the public-private approach to downtown revitalization. The partnership became more complex throughout all stages of the project in the Inner Harbor Development. Leadership appears to have shifted from the private sector towards the public sector. The shift can be attributed to the increasing complexity of managing large scale projects, the improved capapilities of
the city's staff, and the "uncertainty of purpose of the GBC" which had previously projected a unified objective to revitalize the CBD. The GBC recently merged with the Chamber of Commerce. The merger has caused the GBC to broaden its focus to include many civic issues, rather than just the downtown revitalization.
Many of the obstacles which confronted the two projects resulted from using a developmental process which did not involve community representatives in the actual design of the project, as well as the use of primarily executive public and private leadership. Neighborhoods were almost completely left out of the developmental process. They were asked to review plans in the Inner Harbor project, but were virtually ignored in the Charles Center development. Decision-making positions were filled by government officials or business executives. However, the neighborhoods did put up a good fight against the expressways and succeeded in defeating the proposal. As a result, Baltimore retains many of its most historic, unique, ethnic neighborhoods which are now considered to be assets to the city.
Small businesses were another group which had very little voice if any in the development of these projects. Charles Center displaced 371 small businesses. The firms were compensated the appraised value of their physical assets, but that was about the extent of the effort.
Recent research on the importance of small businesses suggests that, especially in central cities, firms with fewer than twenty employees may account for as much as 80 percent of all new employment generated in these areas. (Berger 1982: p. 52)
The Baltimore Economic Development Corporation was established to create
PROJECT OUTLINE: Charles Center and Inner Harbor
PROJECT PROJECT INITIATORS PROJECT JUSTIFICATION SCOPE Or PROJECT INVESTMENTS SOURCES DEALS PROJECT MANAGEMENT
Charles Private Sector .Both public and private .self-contained pro- .financed substantially .Public & Private .GAC Committee con-
Center Greater Baltimore sectors felt project ject aimed at CBD through private invest- funds separated sisted of lenders
Commi ttee would increase property revi talizations ment into district S. other business-
, values and tax base projects men, Mayor, BURA
James Rouse 33 acres .low risk commercial Director
Clarence Miles i nvestments .relatively
M.J. Brnriie uni fied complex of straightforward .virtually no grass
Walter Sondheim office buiIding, a- .$127 million: financial deals roots citizen par-
Martin Mills pa ugh partments, hotels. $90 million in private ticipation
a theatre connected sector .Federal funds
Initiated Planning by pedestrian plazas $20 million in federal were 1 time pro-
for Project, 1957. and walkways, retail $25 million in Public ject specific
shops Bond Issue floated by the city grants
Project comprised of:
.200 mi 11 ion sq.ft. of office space .700 apartments units .700 hotel rooms
Inner Public sector: .Public sector felt pro- .large scale revital- .substantial preliminary .Public-Pri vate .Inner Harbor Steer-;
Harbor Robert Embry, Com- ject would contribute tax ization project em- public investment to funds combined inq Committee: 1
mission. Housing base additions, increase phasis on improvinq attract private funding in the same pro- private businessman.
and Community employment, and minority overall working and jects the executive direc-
Development opportunities, quality living conditions in .investments in project tor of GBC, but com-
of life, improvements downtown Baltimore generally more risky re- .complex financial mi ttee reported to
Private sector: were also claimed quiring public subsidy deals all private Planning
J.Jefferson Miller .Project area includes (federal and local fund- Council
Martin Millspaugh .eventually private sec- waterfront and neigh- ing) .federal funds
tor also supported pro- borhoods that sur- from continuing .some citizen parti-
Initiated Planning ject round it, (Federal .required leveraging of entitlement pro- cipation some of
for Project in 1981 Hill, Otterbein) public funds on a mas- grams such as it negative in pro-
sive scale CDBG test of expressway
.developments include: scheme, some of it
Harborplace Conven- .$270 million over 30 yrs: positive as when
tion Center, Maryland $180 million in Federal they were asked
Science Museum, Na- funds about their housing
tional Aquarium, and $58 million in city re- needs
World Trade Center, sources
U.S. Fidelity and $22 million in private establishment of
Guarantee Office investments Charles Center/
Buildings, Hyatt Re- Inner Harbor Man-
gency Hotel, campus of Baltimore College, offices of IBM Cor- agement Corp. 1965
poration, high-rise housina
strategies to prevent small business displacement. The organization has made efforts to improve the relocation process for displaced businesses.
Given these problems, Baltimore's partnership was successful in bringing the public and private sector together to accomplish a project which has had a major impact on Baltimore. Richard Davis, a Director at the Department of Housing and Community Development, remarked that "fifteen years ago nobody would say anything good about the city; it's obvious that the redevelopment has awed everyone". (4/26/82) The following factors were instrumental in building the partnership.
1. STABLE, POWERFUL MAYORAL LEADERSHIP WHICH HAS PROVIDED CONTINUITY TO THE CITY'S PUBLIC-PRIVATE COOPERATIVE REDEVELOPMENT POLICY
Baltimore's mayors have been supportive of public-private joint ventures. The mayoral leadership has not changed its political philosophy drastically during the terms of D"Alesandro, Jr., Grady, McKeldon, D'Alesandro, III, or Schaefer. Schaefer, the present mayor, is particularly concerned that community support goes along with the physical redevelopment of the city.
2. BALTIMORE'S SEVERE DOWNTOWN ECONOMIC DECLINE PRESSURED BOTH SECTORS TO COOPERATE TO REVITALIZE THE CITY
Both sectors were negatively impacted by the declining economy. It was to their mutual interest to work together on the revitalization of the city. The mutual interests provided momentum for the partnership.
3. PRIVATE SECTOR HAS A NETWORK OF AGGRESSIVE POWERFUL LEADERS COMMITTED TO REVERSING BALTIMORE'S ECONOMIC DECLINE.
Baltimore's leaders were of national stature. They formed a network of leadership which infiltrated both public and private sectors. The leadership has also provided continuity to Baltimore's decision-making process. Baltimore's business community recognized that they had to take an active role in Baltimore's revitalization; otherwise they would also go under with the city.
4. A REDEVELOPMENT MASTER PLAN WHICH WAS SUPPORTED BY THE PUBLIC AND PRIVATE SECTORS
The plan gave each sector a clear understanding of how the redevelopment would occur and type of funding needed to implement the plan. The plan's focus on the waterfront area was a wise decision. Water has proven to be an attraction to residents and visitors. (Davis, 4/26/82) The city is now trying to increase public access to the waterfront.
5. LOCAL GOVERNMENT'S OWNERSHIP OF KEY DEVELOPMENT SITES
The plan also gave the City guidance on which sites to acquire for redevelopment purposes. The waterfront area is an attractive property which had a high potential to be a successful redevelopment project. The harbor and adjacent neighborhooods are assets that support the project's purpose to attract visitors. Baltimore's public money was invested 10 years ago before the present economic crunch. As a result, the private sector is now seeking partnerships with the city to develop these sites.
6. THE CHARLES CENTER INNER HARBOR MANAGEMENT, INC. IS AN INTERMEDIARY ORGANIZATION WHICH IS SUCCESSFUL IN ATTRACTING DEVELOPERS WHO WILL CONSTRUCT PROJECTS WHICH COMPLIMENT THE CITY'S REDEVELOPMENT OBJECTIVES
The Charles Center Inner Harbor Management, Inc. is a unique quasipublic organization^which bridges the interests of the city with those of the business community. The CC/IHM has had an illustrous leadership which traces its beginnings back to many of Baltimore's most renowned leaders from the Citizens1 Planning and Housing Association. Its leadership has had the respect from both public and private sectors which has made CC/IHM an effective negotiating entity.
7. THE CITY'S DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT PROVIDED A STREAMLINED PUBLIC AGENCY WHICH COULD RESPOND QUICKLY TO DEVELOPMENT NEEDS.
By centralizing the city's departments which deal with physical development powers, the city was able to work more efficiently with the business sector. The Commissioner's position at the Department of Housing and Community Development was held by Robert Embry, Jr., and then M.J. Brody, both CPHA members. CPHA leadership provided a continuity of development philosophy within the agency. The business community considers Baltimore to be one of the easiest cities to do business in. Mayor Schaefer set up quasi-public trusts which allow the city to do business with the private sector in a more flexible, responsive manner. As innovative as this may sound, it has its problems. Large amounts of public money can be committed to projects without City Council review and traditional disclosure and review processes. The attitude in Baltimore is very different from that of Portland. (See Partland Case Study: Portland's Effort to Promote Public-Private Sector Cooperation). As one interviewee responded, "With diffused government, how would you get anything done?" (Bonne!! 4/21/82). Baltimore appears to be pleased with such a centralized governmental system.
Probably the most influential factor in the partnership is the continuity of public and private leadership. The leadership was able to provide stability in purpose and a steady flow of financial resources necessary to implement large scale revitalization programs. Secondly, the citys economy was in such a poor state that public and private sector leaders were pressured into a co-operative working relationship based on a mutual self-interest to see the city surmount its economic problems. The Master Plan provided an accepted and understandable approach to the city's revitalization.
The plan also guided the local government's acquisition of prime sites for redevelopment. The CC/IHM, Inc. was instrumental in coordinating private and public interests in large scale projects such as Inner Harbor. These factors were particularly important to the success of the partnership. The following factors facilitated the creation of a partnership. An asterisk indicates the important factors.
*1. STABLE, POWERFUL MAYORAL LEADERSHIP WHICH HAS PROVIDED CONTINUITY TO THE CITY'S PUBLIC-PRIVATE COOPERATIVE REDEVELOPMENT POLICY
*2. BALTIMORE'S SEVERE DOWNTOWN ECONOMIC DECLINE PRESSURED BOTH SECTORS TO COOPERATE TO REVITALIZE THE CITY
*3. PRIVATE SECTOR HAS A NETWORK OF AGGRESSIVE POWERFUL LEADERS COMMITTED TO REVERSING BALTIMORE'S ECONOMIC DECLINE
4. A REDEVELOPMENT MASTER PLAN WHICH WAS SUPPORTED BY THE PUBLIC AND PRIVATE SECTOR.
5. LOCAL GOVERNMENT'S OWNERSHIP OF KEY DEVELOPMENT SITES
6. THE CHARLES CENTER/INNER HARBOR MANAGEMENT, INC. IS AN INTERMEDIARY ORGANIZATION WHICH IS SUCCESSFUL IN ATTRACTING DEVELOPERS WHO WILL
concerning quality of city life should not be made by only the local govern-
ment and business executives.
If there was a lesson in this experience for both the business community and the city officials, it was that future planning must find some way to take into account the interests of the neighborhood organizations and concerns for residential development. What had begun with a narrow concern for eliminating blight and improving property values in the commercial center was widened to encompass the community as a whole.
(Berger 1982: p. 50).
The following case studies will illustrate how the public-private partnership can include neighborhoods in project development and leadership positions.
CASE STUDY: PORTLAND, OREGON
PROJECT: St. Johns Business District
Portland has been chosen as a case study because of the high de gree of participation of its neighborhood organizations in public-private cooperative efforts. In the Baltimore case study, neighborhoods had the role of reacting to the Inner Harbor and Charles Cente projects. The St. Johns Business District Improvement Program shows how effectively neighborhoods can participate in the development and implementation of public-private programs. This section will begin with an introduction to Portland, its people, politics, and efforts to develop policies which reflect a public-private partnership attitude. The focus of the case study will be the description and a-nalysis of the St. Johns Business District Improvement Program.
An Introduction to Portland
Portland is well-known for its scenic environment and is frequently referred to as "America's Most Liveable City". (Barbour 1982 p.l) Oregonians are noted for being particularly concerned about their environment and have taken many innovative steps to protect it. Portland's population is rapidly increasing which reflects a shift of population in the region from rural to urban areas.
Portland with a population of 373,000 persons in a metropolitan area of 1.1 million, has been described as 'a small town in the body of a big city, one of the last ports of the
frontier'. Its population is relatively homogeneous: the median family income-$20,900- is high and the proportion of non-white residents --8.8%is low for a city of its size.
(Schweitzer 1980: p.l)
In contrast, Oregon is experiencing an out-migration of people from the Pacific Northwest to other regions. (Barbour!982: p.6)
Although Portland has a small-town atmosphere, it serves as the hub for business, transportation, and service activities for the state, southwest Washington, and the Columbia River Basin. Portland's economy is going through a period of economic restructuring. Many of the old lumber mills are either being shut down or automated. The local economy is making an effort to be less dependent on foresty and the food products industry. (Barbour 1982: p.5) Oregon is trying to diversify the economy by attracting the machinery, electronics, transportation equipment, and fabricated metal industries to locate in the state.
Portland's unemployment rate is approximately 11 percent (Mounce 4/22/82). In comparison to the nation, Portland's employment in transportation, communications, utilities, wholesale and retail trade, finance, insurance and real estate, and services is proportionately greater in Portland. Yet in manufacturing, mining, contract construction, and government employment it is proportionately lower compared to the nation. In general, Portland is viewed as a desirable place to live and work.
The community is aware of the pressures for growth and is making efforts to preserve the assets of Portland as well as to allow for economic development .
Portland's Efforts to Promote Public-Private Sector Cooperation
Portlanders have an unusually high willingness to participate in community affairs. In "Report on a Vision of Portland's Future" prepared by the City Club of Portland, the list of community assets included "Portland's concerned and participating citizens". The reasons for such widespread citizen involvement are numerous. First, "people care about the city and identify strongly with Portland's natural beauty and small town atmosphere". (P. Kimboko, 4/21/82) Secondly, government has taken steps to support citizen participation in its public policy development. Oregon's Land Development and Conservation Commission, a state level agency, established a law which mandates that strong citizen participation be included in the process for developing any comprehensive plan. Mayor Neil Goldschmidt, who served as mayor form 1972 to 1979, is considered to be the most influential promoter of community participation in city politics. His administration focused on the rehabilitation of neighborhoods and "encouraged citizens to make the decisions that affected their welfare". (Schweitzer 1980: p.2) Thirdly, perhaps due to Portland's small town character, citizens feel politically potent. "The city ethic is to participate". (P. Kimboko, 4/21/82) People feel that they are able to make a worthwhile contribution to civic affairs. Moreover, people feel that many of their ideas will be implemented. In Portland, the concept of public-private partnership is an accepted way of working on civic issues.
Portland's government is a "city council or more properly-commission" form of government. (Barbour 1982: p.8) Established in
1913, the commission includes the mayor and four commissioners. Each member serves as the administrative officer of a major department of city government. Public Affairs, Finance and Administration, Public Safety, Public Utilities and Public Works are the five departments managed by individual members of the commission. The commission form of government under most circumstances, divides the powers to legislate and administer the city government among five officials.
The mayor's position continues to be one of importance. Because the mayor is not:
by charter the executive head of government, he or she must have important skills of organization and persuasion in order to employ executive power. Former Mayor Neil Goldschmidt characterized the mayor's role well: 'When the mayor makes commitments, he has to be able to deliver three votes on the council'".
(Barbour 1982: p.9)
The mayor controls the budget preparation and assigning of commission responsibilities. This power is an important political tool. If the mayor wishs, he or she may assign all government functions under the mayor's office. Thus, though city government is legislated and administered by five commissioners, the mayor if he/she decides can "literally run the show". (Barbour 1982: p.8)
As a result of the commission system, the mayor's role in city politics reflects the political style of each individual mayor. During the 1960's, former Mayor Terry Schrunk consolidated all of the commissions under the mayor's office. In contrast, previous mayor Neil Goldschmidt is described as:
a dynamic, far-sighted, and political! astute mayor...with an ability to pull together a lot of warring political factions in the community, show them where their common interests lay, and prod them towards these common goals.
(Schwetizer 1980: p.2)
Though the commission form of government diffuses power, the mayor's position continues to shape the administration's policies.
The city has sixty-eight distinct neighborhoods and fifty-four independent neighborhood associations which are consulted regularly on park development, transportation, and housing issues. (Barbour 1982: p.2) The Office of Neighborhood Affairs (ONA) was established
in 1974 to coordinate neighborhood interests with the activities of the Portland Development Commission (PDC) and City Bureau of Planning. The PDC has emerged as an important community agency with distinct powers, resources, and staff. ONA provides organizational and coordination assistance to the neighborhood groups; the Bureau of Planning provides planning assistance; and the PDC is the vehicle for implementing the projects.
A popular private sector organization is the City Club of Portland which has had a membership increase of 40 percent over the past ten years. Its goals reflect a sense of public-private cooperation:
Business and government will work together to set goals to meet environmental and social needs. Businesses which meet such goals creatively will be rewarded through the tax structure for doing so.
Business owners will understand that a healthy economy includes high-quality social, cultural,
educational, and recreational institutions and will support these institutions through financial contributions, loaned executives, and other programs.
(Report on a Vision of Portland's Future 1980: p.294-295 )
Recently, the Association for Portland Progress was organized to involve the private sector in downtown revitalization. Public-private communication is open and regular. The city has taken a great deal of time to insure that the private sector has a comprehensive understanding of the city's development objectives. As an example:
the downtown development effort began with the mayor making a personal appeal to the retailers to remain in downtown Portland. Scores of meetings, often on a one-to-one basis, were held to solicit ideas and support and to explain the decisions made. (Barbour 1982: p.6)
Portland's Development of Revitalization Plans and Policies
Public policy reflects the importance of public-private cooperation. "The Portland Downtown Plan" (October, 1980) and "Economic Development Policy for the City of Portland" (March, 1980) are examples of the city's recognition of public-private partnership. The policies were also arrived at by using a grass-roots community partici--. pation process.
The Downtown Plan Citizens Advisory Committee set out to revise the original "Downtown Plan" (1972) in 1980. A series of committees were organized around specific issues concerning housing and downtown
neighborhoods, commerce, waterfront, Portland State University, park blocks, and transportation. Public meetings were held at which issues were raised related to each committee. It was the committee's responsibility to address these issues. Each committee developed goals and objectives which were drafted, edited, and approved by the committee.
The final revised plan includes Citizen Advisory Committee input as well as the Planning Commission and City Council recommendations.
The Economic Development Policy for the City of Portland was also prepared by an advisory committee, the city's Economic Development Advisory Committee. Eight areas related to economic opportunities were covered: public and private partnership: jobs and incomes; business and industry: district economic development; central business district; equalization of economic opportunity; regional coordination; and environment, energy, and transportation. (Barbour 1582: p.4) The policy states that economic development should be pursued by both public and private sectors in a cooperative effort. The proposal was adopted on March 8, 1980.
The St. Johns Business District Improvement Program
The St. Johns neighborhood is one of seven neighborhoods located on a five square mile peninsula called North Portland. St. Johns is often considered to be a small town itself because of being located on the northernmost edge of the city. The residents at times have also considered themselves to be a community isolated from Portland. Twice during the early 1900's, St. Johns ceded from the City of Portland. The neighborhood is one of Portland's oldest. Residents have strong
attachments to the area, which causes them to be particularly vocal in community affairs.
St Johns is surrounded by industrial development. What developable land remains, in the area, is to be used for industrial uses.
The Port Authority own 50 percent of the properties in North Portland.
The community is, predominantly, lower-income blue collar "with over 10 percent of all families below the poverty level, compared with 6.9 percent in the Portland SMSA". (Barbour 1982: p.9) Most of St. Johns residents have union jobs. North Portland's unemployment at its best is 9 to 11 percent. St. Johns, unlike Portland, does not have a homogenous population. The neighborhood includes American Indians, Indo-Chinese, and Chicano groups, as well as Anglos. St. Johns is proud of its diverse ties to many ethnic groups. Its community based organization, Neighbors North, is the only neighborhood in the United States that is affiliated with an international sister city, Sakura, Japan.
The St. Johns Business District had a developmental problem which was well suited to a public-private cooperative solution. (Barbour 1982: p.1S) The neighborhood business district provided the community with a strong identity and sense of unity. The area was similar to the commercial street of a small town. The district was, basically, economically sound, but was beginning to show signs of slight decline. (Barbour 1982: p.21)
A study by Lord and Leblanc, Inc., in 1976, showed "that the central problem facing the business district was its inability to capitalize on growth in the area's market demand". (Barbour 1982: p.22) The study defined two requirements for revitalization:
...(1) perception on the part of entrepreneurs of unmet demand resulting from a limited supply of retail and service offerings relative to demand and their response to those opportunities; and (2) public actions taken to create opportunities. (St. Johns Business District Improvement Program 1976)
This two part solution provided St. Johns with a public-private framework for the project.
Not until 1975, did St. Johns receive any planning or other governmental assistance. The community was selected to be one of the neighborhoods involved with the Community Development Block Grant program. The grant spurred the neighborhood groups into active involvement in the revitalization efforts. The North Portland Citizens Committee (NPCC) was considered to be representative of neighborhood interests. In 1974, the city provided a neighborhood coordinator and staff for neighborhoods in North Portland. The coordinator worked through the NPCC office. Neighbors North was the local community group which worked with the NPCC.
The St. Johns Boosters, "a business promotional group founded in 1932% organized a Plan Advisory committee made up of eighteen residents and merchants who would work with NPCC and the city "reviewing plans and providing business and residential input". (Barbour 1982: p.21)
The city and community began the project with the premise that "it was important to combine business district improvements with residential area conservation so that homeowners would not be competing with merchants for improvement dollars". (Barbour 1982: p.21) The merchants requested from the city and NPCC that the $800,000 CDBG allocate $52,000 to the commercial district for rehab loans and architectural services.
Next, the PDC, Bureau of Planning, and Plan Advisory Co mini tfee contracted
with Lord and Leblanc, to develop a comprehensive pain. Ten public workshops were held to create the 5 year revitalization plan. The project also identified potential public and private funding sources.
The program was implemented by many groups, the majority being community based organizations. The project developers included the Plan Development Commission as manager; the Bureau of Planning as technical analyst for certain projects; Neighbors North as community organizers; the Plan
Advisory Committee as the repres terests; the St. Johns Boosters NPCC as the overall neighborhood
entative for merchant and resident ilies primary program participants; and the review body for Community Development
Block Grant Allocation. (Barbour 1382: p.22)
The Business District Improvement Program's purpose is to improve the physical appearance, economic performance, and transportation network within the business district. The program is unique in that it trys to view the changes in regard to neighborhood and business interests. "The city wanted to maximize the benefits of the physical improvements by coordinating them with activities designed to increase the economic strength of the commercial center". (Barbour 1982; p.23) A priority consideration was that the project make good economic sense as well as benefit individuals and the community as a whole.
Some of the physical improvements caused intial controversies. As an example, the PDC rerouted trucks through the business district which angered merchants. The result was that the merchants and PDC get together and came up with new ideas for traffic circulation which were acceptable
to both groups. The dispute had recieved a lot of media coverage which brought the merchants together and also encouraged potential investors to inquire about the district. In the Baltimore study, a similar transportation dispute arose. The difference is that in Baltimore, the residents, felt no responsibility to work with the city as they had been left out of the initial planning process. Baltimore did not do the preliminary groundwork with the community which is important to effective negotiation.
The Business Development program also needed a strong management component in order to provide a more comprehensive approach to the commercial district's revitalization. Merchants requested that expertise in merchandizing, publicity, and computerized accounting systems could greatly improve the management of their businesses. In a round about way, the Neighborhood Reinvestment Corporation (NRC) became involved in a pilot program in St.Johns, which provided this type of technical assistance. The NRC is comprised of the Federal Home Loan Bank, Comptroller of Currency, Secretary of Housing and Urban Development, Federal Credit Union, and Federal Insurance Union. The NRC's purpose is to provide financial backing for various economic development pilot studies.
In the Fall of 1978, Jerry Mounce, neighborhood coordinator for Neighbors North, was introduced to a project developer for NRC. The informal introduction provided the necessary contact to encourage Mounce to write a proposal to NRC. On Christmas Eve, neighborhood representatives, bankers, and public officials met at Portland's City Hall,and wrote the final proposal in order to meet the application
deadline. As a result, ilRC provided $75,000 to St. Johns to bring in specialists in advertising, merchandizing, accounting, finance, and other business related areas. The University of Portland's Business Department provided techinical assistance. The merchandizing director for Nordstroms, a large department store based in Seattle, participated in a series of seminars. Expertise was available on a one-to-one basis to merchants.
A spin-off of the management program is the establishment of the St. Johns Financial Committee. Commercial banks, Savings and Loans, and merchants from the commercial district meet twice a month to discuss rehab loans. Presently, a system is used where 50 percent of the loan is made at the market rate (approximately 19 percent in Portland) and 50 percent is subsidized by the Portland Development Commission at 3 percent for up to $50,000. At this time, twelve rehab loans have been made to merchants. The average amount of the loan is approximately $75,000. (Granquis, 4/21/82)
In 1980, the St. Johns Boosters, were awarded a grant to establish the St. Johns Office to promote further revitalization. The purpose of the office will be to assist individual businesses with grant monies received from the city.
Many different funding sources have been used for these programs.
CDBG funds initiated the program. "Over a two year period, $662,000 was allocated to the business district". (Barbour 1982: p.23) The NRC grant provided $75,000 for the St. Johns Business District Improvement Program. A National Endowment for the Arts grant of $10,000 covered the cost of publishing an Improvement Design Handbook for merchants in-
terested in rehabing their stores. In total, approximately $750,000 has gone to the business district and $1,329,000, to the residential area. (Barbour 1982: p.23)
Factors Which Made the St. Johns District Improvement Project A Successful Public-Private Partnership
The success of the St. Johns Business District Improvement Project is difficult to dispute. In interviews with public, neighborhood, and business representatives, the project was unanimously called a "success".
The benefits of the public-private partnership can be measured in community improvement and the more effective ways of working with the groups involved in the revitalization process. The project generated $1.5 million in physical rehabilitation of the business district, a $1 million St. Johns Racquet Center, $1.7 million for Cathedral Park, and over 400 renovated homes, and some $12 million of capital improvements in the residential neighborhood. (Barbour 1982: p.28) The NRC sponsored management program was instrumental in recruiting 21 new businesses to St. Johns and retaining over 80 businesses.
In less quantifiable terms, other improvements have occurred, which have facilitated the working process among all partners. Publicity events are frequently held, workshops, seminars, etc. The activities have served to increase the enthusiasm merchants have for their district. The St. Johns business community has become better organized, and uses a group decisionmaking process to address many issues.
The purpose of this summary will be to identify which elements facilitated the success of the project. The list is based on personal interviews with project administrators in Portland and my own analysis of the case study.
1. DYNAMIC LEADERSHIP ON THE PART OF MAYOR NEIL GOLDSCHMIDT
Mayor Goldschmidt's aggressive, coalition-building political style
was instrumental in providing the leadership necessary to bridge the interests of the private sector and neighborhood. The Mayor has been described as dynamic, untraditional far-sighted, progressive, as well as abrasive. One public official remarked, "Anyone who visualizes things that clearly and moves that fast is going to step on some toes." (Schweitzer, 1980: p.2). Nevertheless, his ability to build on the mutual interests between the business community and neighborhoods, as well as advocacy of citizen particpation, were critical to the project's success. Goldschmidt's administration accurately reflects his philosophy of political power which he defines as "shared responsibility". (Mounce, 2/22/82). In other words, you have to get all actors to own the problem.
2. THE EXISTENCE OF A BROAD-BASED NEIGHBORHOOD ORGANIZATION WHICH LEGITIMATELY REPRESENTS COMMUNITY INTERESTS TO THE CITY AND BUSINESS COMMUNITY.
3. PUBLIC AND PRIVATE SECTORS CONSIDER THE NEIGHBORHOOD ORGANIZATION A CREDIBLE REPRESENTATIVE OF COMMUNITY INTERESTS.
NPCC's strong ties to many community organizations gave it a wide community support base.
Without organization, neighborhoods have no power to equal that of government and business, both of which are organized to put people and money behind changes they desi re.
(Hanson 1981: p.28)
A strong representative neighborhood group increases the neighborhood's credibility with the city and private sector, which enables the community to build on its accomplishments. More importantly, the community organization has credibility with its own residents. Many neighborhood organizations lack legitimacy because they do not truly represent the community's interests. Being able to show a track record of broad-based representation protects the neighborhood from such accusations. In a study by the National Commission on Neighborhoods, the NPCC was described in the following way:
Their strong leadership, connected with various networks in the city and the neighborhood, plus the coordination through Neighbors North, has produced a wide ranging and diverse base of support. This has happened by means of a conscious strategy of packaging community resources and leveraging one achievement into clout for another issue.
(People Building Neighborhoods, 1979)
A sense of community combined with strong leadership can synergize neighborhood efforts into positive accomplishments.
4. THE ST. JOHNS BUSINESS IMPROVEMENT PROGRAM USED COMMUNITY PARTICIPATION TO DEVELOP THE PROGRAM WHICH INSURED THAT THE PLAN WOULD BE SUITABLE TO ST. JOHN'S COMMERCIAL DISTRICT AS WELL AS SURROUNDING NEIGHBORHOODS.
People will have a much more thorough understanding of the project's constraints and opportunities from all sides of the issue if they are involved in the development of the plan.
For residents to own the life of their neighborhood, they must decide themselves what their neighborhood is; ...they must decide what should be done in their neighborhood...If the neighborhood does not define its own problems, someone else may define them inappropri ately.
(Partners, 1981 : p.14)
When residents take part in the creation of a project, they tend to have some sense of responsibility for following through on the plan. When the traffic circulation dispute arose in the business district, tempers flared. However, later on, a cooperative effort was made to find a solution which ended up being much more innovative than the first idea.
The city recognizes the program's experimental nature and has been flexible, allowing city staff to alter the program when necessary...sensitive to the public-private partnership that neighborhood commercial revitalization demands...staff followed program progress closely and suggested careful adjustments when needed.
(Portland's PDC Report, 1970)
This type of problem-solving approach is attributable to the grass-roots participation of the community during the initial phase of the project.
5. A CITY GOVERNMENT DECISION-MAKING PROCESS WHICH INCORPORATED AND ACTED ON RECOMMENDATIONS FROM ST. .JOHN'S NEIGHBORHOOD GROUPS MADE CITIZEN PARTICIPATION AN EFFECTIVE WAY TO INFLUENCE THE CITY.
Portland's decision-making process is built around a citizen participation framework. It is important for the neighborhoods to understand how the local government makes decisions and more importantly how to influence the process so that the appropriate decisions are made concerning thei r nei ghborhood.
6. NEIGHBORHOOD LEADERS ARE EFFECTIVE COMMUNITY ORGANIZERS AS WELL AS EFFECTIVE COMMUNITY REPRESENTATIVES IN NEGOTIATIONS WITH THE PRIVATE SECTOR AND LOCAL GOVERNMENT.
In St. Johns the decision-making process reflects the neighborhood's skill at using its political influence and consensus building talents.
Jerry Mounce described St. Johns' decision-making process in the following manner: "The flow of money was from the city agencies to the neighborhoods. The neighborhood leveraged over thirty different pots of city money for the improvement program." (Mounce, 4/22/82). The North Portland Citizens Committee (NPCC), St. Johns Boosters and a representative from the Housing/ Community Development Agency, Planning Department, and Jerry Mounce formed the St. Johns Advisory Committee. NPCC advocated the advisory committee's recommendations to the city. The committee built the constituency among the neighborhoods residents to back up their recommendations on funding and program objectives.
The NPCC representatives became close friends, as well as business partners with the city. With their personal ties to the city, the NPCC was able to utilize all the city government's expertise on behalf of the neighborhood. The close working relationship was informal, but effective in establishing the NPCC as an influential group at city hall. The working relationship was informal in that a voting system was not used. Mounce Stated that the community learned that their political influence and neighborhood consensus on issues were their most influential political tools.
As a citizen, "You leverage whatever you can from your community to accomplish your objectives." (Mounce, 2/44/82) The neighborhood is concerned
with community input in the decision-making process>but has also mastered the political techniques required to get concrete accomplishments for the community, whether that means a change in a proposed highway route or an adjustment in a zoning matter. (.Mounce, 2/4/82}
7. NEIGHBORHOOD HAS ON-GOING STAFF AND TECHNICAL ASSISTANCE TO COORDINATE COMMUNICATION AMONG RESIDENTS AS WELL AS COMMUNICATION BETWEEN THE NEIGHBORHOOD AND CITY, AND TO MANAGE COMMUNITY PROGRAMS.
Technical assistance was recognized by all groups as being critical to the effectiveness of the program. Jerry Mounce, based at Neighbors North, was instrumental in bringing the community merchants together with city and private officials. Raised in St. Johns, with over ten years of financial experience in the private sector, Jerry Mounce is considered to be a particularly effective neighborhood coordinator. She is able to speak the language of business as well as the neighborhood. The program also pointed out that the physical changes such as housing rehab and facade redesign taken alone would not improve a declining area. Technical assistance in accounting, advertising, merchandizing and other business management areas were critical to making an enduring positive impact on the neighborhood.
Doug Granquis, Business Director of the St. Johns Business District, did a nationwide study on commercial revitalization projects to determine the success of projects which had only volunteer staff. According to the study, there has not been one project that worked without a paid professional staff. (Granquis, 4/21/82)
PROJECT OUTLINE: St. Johns Business District Improvement Program
PROJECT PROJECT INITIATORS PROJECT JUSTIFICATION SCOPE OF PROJECT INVESTMENT OF SOURCES DEALS PROJECT MANAGEMENT
St. Johns Busi- .the allocation of CDBG .in order to improve the .St. Johns neighborhood .$800,000 initially .Portland Development
ness District money to the St. Johns neighborhood, both residen- which included the $62,000 for commercial re- Committee program
Improvement neighborhood provided tial and business issues commercial district hab loans and architec- manager
Program the impetus for community revitalization should be addressed (ten square blocks) tural services .Bureau of Planning -
Initiated efforts .to improve physical ap- .to promote residential .$738,000 housing rehab technical analyst
197b pearance, economic per- area conservation and loans and public works for certain projects
.St. Johns neighborhood formance and transporta- business district im- improvements
groups involved in the tion network within the provements .Neighbors North -
initiation of the pro- business district later fundinq community organizer
ject: -North Portland Citi- .PDC combined resources to .Plan Advisory Commi-
zens Committee allocate approximately tee representative
-Neighbors North $760,000 to Business Dis- of merchant and re-
-St. Johns Boosters trict and $1,329,000 to the sident interests
-Plan Advisory Com- Residentail area
mi ttee .National Endowment for the .St. Johns Boosters -primary program re-
.City through its Port- Arts $10,000 for commer- cipients
land Developmen Commission was the city cial rehabilitation .North Portland Citi-
partner zen's Committee -neighborhood review body for CDBG allocation
8. THE AVAILABILITY OF COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS TO INITIATE THE IMPROVEMENT PROGRAM
CDBG funds provided the initial funding for the project. The funds generated new enthusiasm for the project and attracted private investment to the area.
The Portland case study has identified several key factors particularly important to the process of establishing a public-private partnership. The most influential factors appear to be the following elements. Goldschmidt's administration is credited by all three groups for initiating the project. His talent of bringing neighborhood, city and business interests together was of primary importance to the project. The existence of a credible broad-based neighborhood organization was responsible for insuring that the program was what the community wanted. As Jerry Mounce states:
Staff and politicians come and go, the community is much more stable, so what is important is sustaining the close communication with resident interests. The... neighborhood groups insure that each group gets something tangible out of the project. In my opinion, these factors were the most influential in making the St. Johns Business District Improvement Project a success.
The following list includes all the important factors. Asterisks indicate the elements which were important to the establishment of the partnership:
*1. DYNAMIC LEADERSHIP ON THE PART OF MAYOR NEIL GOLDSCHMIDT.
*2. THE EXISTENCE OF A BR0AD-3ASED NEIGHBORHOOD ORGANIZATION(S)
SUPPORTED BY RESIDENTS WHICH IS ABIE TO LEGITIMATELY REPRESENT COMMUNITY INTERESTS TO THE CITY AND BUSINESS COMMUNITY.
*3. PUBLIC AND PRIVATE SECTORS CONSIDER THE NEIGHBORHOOD
ORGANIZATION TO BE A CREDIBLE REPRESENTATIVE OF COMMUNITY INTERESTS TO THE CITY AND BUSINESS COMMUNITY.
*4. THE ST. JOHNS BUSINESS IMPROVEMENT FROGRAM USED COMMUNITY PARTICIPATION TO DEVELOP THE PROGRAM WHICH INSURED THAT THE PLAN WOULD BE SUITABLE TO ST. JOHNS' COMMERCIAL DISTRICT AS WELL AS SURROUNDING NEIGHBORHOOD.
5. A CITY GOVERNMENT DECISION-MAKING PROCESS WHICH INCORPORATED AND ACTED ON RECOMMENDATIONS FROM THE ST. JOHNS' NEIGHBORHOOD GROUPS MADE CITIZEN PARTICIPATION AN EFFECTIVE WAY TO INFLUENCE THE CITY.
6. NEIGHBORHOOD LEADERS ARE EFFECTIVE COMMUNITY ORGANIZERS AS WELL AS EFFECTIVE COMMUNITY REPRESENTATIVES IN NEGOTIATIONS WITH THE PRIVATE SECTOR AND LOCAL GOVERNMENT.
7. NEIGHBORHOOD HAS ON-GOING STAFF AND TECHNICAL ASSISTANCE TO COORDINATE COMMUNICATION AMONG RESIDENTS AS WELL AS COMMUNICATION BETWEEN THE NEIGHBORHOOD AND CITY, AND TO MANAGE COMMUNITY PROGRAMS.
8. THE AVAILABILITY OF COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS TO INITIATE THE IMPROVEMENT PROGRAM.
What is important to remember from this case study is that neighborhood groups were effectively involved in a triangular type partnership which produced positive results. Therefore, it is possible for other cities to strengthen their neighborhoods and involve them in this type of partnership.
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CASE STUDY: Flint, Michigan PROJECT: Riverfront Center
The Flint, Michigan case study illustrates how a public-private partnership, which included neighborhood based organizations, accomplished the Riverfront Center Project, a large scale downtown development effort. In many cities, downtown problems aggravate neighborhood problems. In Flint, Michigan, the linking of downtown redevelopment with neighborhood interests provided the critical financial solution which put the project in motion.
The review of the Riverfront Project will focus on the important issue of financing a project within the context of a Triangular partnership.
Introduction to Flint
Flint, Michigan, located northwest of Detroit is a blue collar community of 160,000 persons. Flint has been battling economic decline for many years. Its economy is based on General Motors, with 80 percent of the economy comprised of manufacturing related to transportation. (Litzenberg 4/21/82) Flint has "the third or second highest unemployment rate in the nation.
As of February 1982, the unemployment rate was 22.8 percent. (Wells, 4/22/82). The black community represents an increasing proportion of the city's population. Hispanics and Anglos comprise the rest of the population. Neighborhood organizations go hand in hand with the unions. As a result, Flint has many well-organized community based organizations.
Flint has a strong mayoral form of government with a legislative body of 9 council persons. The Mayor's Citywide Advisory Committee (MAC) includes 64 representatives who advise the City on Urban Development Action Grant (UDAG) and Community Development Block Grant (CDBG) allocations. The MAC
requires two public hearings to review any project as well as approval on projects before the proposal is sent to HUD.
The City's administration focuses on developing an economic strategy which will revitalize Flint's depressed economy. The present overall strategy includes:
t increase industrial development: a 50,000 sq.ft, industrial complex is being developed to encourage new industrial starts, a central service administration pool would be provided for firms which locate in the complex.
complete Center City Plaza Mall
increase private sector involvement in downtown projects
strengthen neighborhoods by continuing to allocate 75 percent of CDBG money for neighborhood projects.
$ develop Autoworld, an amusement park and historic museum which would highlight the development of the automobile industry. Tourism is Michigan's second biggest industry and Flint wants to capitalize on the tourist trade.
Flint is trying to restructure its cyclical economy. The following Riverfront Center project is part of Flint's overall revitalization scheme.
Preliminary Plans for Flint's Revitalization
The Flint Area Conference, Inc. (FACI) can be credited for initiating the Riverfront Center project. Established in 1970, FACI is a private, non-profit development corporation. FACI's membership includes "chief executives of major corporations, private foundations in the Flint area, private businesses, manufacturers, financial institutions, utility companies, and the University of Michigan. Flint's public sector representatives serve
on the board in ex-officio capacities." (ULI Black, 1981: p.54)
The organization works with the public sector to develop and implement projects that will increase commercial development downtown.
FACI and the Mott Foundation, which is based in Flint, developed "Centric 80", a ten year comprehensive redevelopment plan for the City.
The plan calls for six individual redevelopment projects which are interrelated in "purpose and location". (ULI Black, 1981: p.54). The six projects cited are "a new University of Michigan downtown campus, a planned residential community, a flood control and beautification program, two industrial parks, Autoworld, and Riverfront Center." (ULI Block, 1981: p.54). Four of the projects are underway or completed.
The Riverfront Center project was identified as a public-private coventure project because it comprised common interests mutually beneficial to each qrouD. The city, neighborhoods, and private sector would receive the following benefits from the project.
The hotel/convention center would diversify the city's economy which is one of the local government's objectives. Tourism is Michigan's third largest industry. The city of Flint intends to expand Flint's tourist business. The Riverfront project is an important element in this overall plan to increase the tourist trade in Flint. The generation of new employment opportunities and tax revenues are also important to the city government's overall revitalization strategy. Flint's neighborhoods, through an indirect financing arrangement, will receive money for housing rehabilitation in areas not covered by community development block grants and technical assistance to strengthen neighborhood organizations. The Flint Neighborhood Improvement and Preservation Project will be the intermediary organization which will
administer the program to the neighborhoods. The private sector is particularly interested in the Riverfront Center. It will provide needed improvement to Flint's debilitated downtown, which will improve Flint's image. The project is intended to improve the overall investment climate in Flint, which will in turn stimulate the city's economy. Three additional hotel/motel developments are being proposed as a result of Riverfront. Small minority owned businesses will receive management and loan packaging assistance through the Flint Business Development Corporation (FBDC). FBDC will receive a guaranteed flow of income to support its programs over the next 40 years from the project.
Riverfront Center Development
The city had been talking about a Riverfront redevelopment project since the mid-1950's. Over an eight year period, the public and private sector worked on a general plan for improving the economy of the city.
The important preliminary steps for the project included a series of economic studies which guided FACI, Mott, and the city on what type of project to pursue. FACI selected the firm of Laventhol and Horwath to produce a hotel market and feasibility study. The city also contracted with the firm for a report on convention centers in mixed use developments. Laventhol and Horwath identified a market for a quality hotel. (ULI Black 1981: p.56) FACI, with a grant from Mott, did a study on Flint's
neighborhood organizations to determine how FACI might work with these groups.
The studies assisted in defining the parameters of the project. Riverfront Center includes a 390 room Hyatt Regency Hotel and attached 40,000 square foot convention center with 1,500 ramped parking spaces.
The site is located in downtown Flint overlooking the Flint River.
Riverbank Park provides a buffer between the development and the river. Riverfront's site is surrounded by a variety of developments. The original Buick factory is two blocks away. Several housing developments are northeast of the site. Flint's central business district is adjacent to the development. The University of Michigan and other residential areas are located east of Riverfront.
The next stage of the project was to locate a developer and a hotel manager. The Flint Area Conference took on both responbilities. Landmark Development Corporation from Bloomington, Minnesota was chosen to be the project developer. The firm was selected because they had just completed a similar mixed-use development involving the Hyatt Hotel Corporation in Lexington, Kentucky. (ULI Black 1981: p.57). Hyatt was asked to be the hotel management company. Originally, Hyatt was not interested in the project. The president of FACI, president of Mott, and Mayor Rutherford met with the owner of the Hyatt Corporation, Mr. Pritzker to convince him of the merits of the project. After an on-site visit and a great deal of arm-twisting, Hyatt accepted the offer.
The financing for the hotel and 40,000 square foot conference center is the most interesting and also the most complex part of the project. The development of the financing package was not a linear straightforward process, but was assembled in much the same way a puzzle is pieced together.
By playing with pieces, moving them around, eventually the puzzle or financing becomes a coherent whole. (Kirk, 1982: Interview) The Mott Foundation represented by Larry Doyle, comptrol1er, and Jack Litzenburg,
Director of the Community Development Agency, developed the financing scheme. Doyle commented that it took a day by day, consistent approach to work out the intricacies of the deal . (4/23/82)
Urban Development Action Grant (UDAG) funds were earmarked as an
appropriate funding source for the project. FACI was concerned about
requesting funds for another hotel/convention center due to the Congress
shifting the focus of the program to neighborhood projects. The city's
long-range economic strategy considered neighborhood housing redevelopment
and commercial redevelopment as being equally important. "Linking the
Riverfront Center project to neighborhood housing improvements appeared to
be the key to obtaining UDAG funding." (ULI Black 1981: p.58). The
following paragraphs describe the intricate financial packaging which
made Riverfront Center possible. The following description is paraphrased from
an Urban Land Institute report on the Riverfront Center Project. (ULI 1981: p. 5
Flint Neighborhood Improvement and Preservation Project/Mott Foundation Finance Package
A 6 million dollar grant from the Mott Foundation to NIPP. NIPP will loan the money for construction of the hotel and will provide home improvement and rehabilitation loans with the repayments.
(ULI Black 1981: p.59-64)
Flint Neighborhood Improvement and Preservation Project (NIPP) was
chosen to receive the Mott money which would then be loaned to the hotel
developer. This solution was developed because an IRS regulation "provided
that no more than 20 percent of the required equity could come from the
foundation" (ULI Black 1981: p .59). NIPP provides low to moderate income housi
rehabilitation services citywide. They have an annual contract with the City's Community Development Agency. NIPP had an efficient accounting system and tax status that could handle such a large foundation contribution. The Mayor and City Council approved the NIPP as the recipient of the foundation money. NIPP plans to use the money for rehabilitation in neighborhoods not covered by the CDSG and for technical assistance to build the effectiveness of community organizations. Hotels usually take three or four years to become profitable. Assuming the project is profitable, NIPP is to receive a return on their $6 million amounting to $1,000,000 per year by 1987. (Bates 4/21/82)
The Role of the Flint Business Development Corporation
$4.3 million of the development costs will come from the $6.5 million UDAG to the city of Flint. The remaining $2.2 million of the UDAG will be used for the development of a private office building on Saginaw Street across from the hotel. (ULI Black, 1981: p.64)
A $2 million mortgage indebtedness to the Flint Business Development Corporation(FBDC) for the land. The FBDC expects to realize revenues by conveying the land to the hotel/convention center partnership and holding a second mortgage. Revenues will be used to assist the development of minority owned businesses. (ULI Black, 1981: p.67)
HUD required the UDAG proposal to include minority participation. Originally established under HUD's Model Cities Program, the Flint Business Development Corporation (FBDC) was an obvious organization to choose for participation in the project, as they are the only minority development corporation in Flint. FBDC, a 501(c)(3) corporation, is strictly non-profit and,when investing in projects for profit, is required
to return any profits on their investment to the community. The corporation's purpose is to provide minority businesses with management and loan packaging assistance.
In response to HUD's recommendation, $2 million in UDAG funds would go to the Flint Business Development Corporation. Mott agreed to provide interim funding for the FBDC until cash flow from the hotel is realized.
By 1984, the FBDC will receive $100,000 annually for 40 years as part of the debt service on the $2,000,000. Bobby Wells, Deputy Director of the FBDC, pointed out that neighborhood development corporations should "avoid a situation in which the income that is returned to the development corporation is dependent on the profits of the project. Instead, you want your return to be a part of the debt service." (Wells, 4/22/82}
Private Sector Investment
Private investors provided a significant amount of financial support for the project.
The Northwestern Mutual Life Insurance Company will provide construction and permanent financing through a $12 million conventional first mortgage.
Private investors will provide $6.2 million of the remaining $7.1 million necessary for the development of the hotel project. General partners will provide $460,000 for the project. (ULI Black 1981: p. 68)
The investors included CRI, Inc. of Rockville, Maryland which provided $5 million in investor equity. CRI is the nation's lead entity in syndicating equity participation. (ULI Black, 1981: p.63) Appletree Enterprises, the
a subsidiary of Landmark, Inc. also invested in the project. General Motors and the Hyatt Regency Corporation each invested $600,000 in Riverfront Center.
The Role of Flint Renaissance, Inc.
Flint Renaissance, Inc., a non-profit 501(c)(3) became corporate partners in Riverfront Center Hotel Associates (RCHA). The organization is comprised of almost the same people that are on the FACI. Their responsibility is to provide community input throughout the project's development and eventually its operation. In return, the President of Flint Renaissance will serve as one of the five general partners of the RCHA Board. Renaissance will also hold:
1/4 of 1 percent of the hotel's losses (which are of little concern to a 501(c)(3) corporation)
1/4 of 1 percent of the gross profits form the hotel operation as a general partners asset fee.
1 percent of the profits and residual interest in the property upon sale.
With the income, Flint Renaissance plans to pursue further economic development projects. Other RCHA partners include Flintmark, Inc., Rivermark, Capital Housing Realty Corporation, and CRIMARK.
Parking facility requirements for the hotel and State of Michigan Office Building were built by a private developer, contracted by the city, who financed two 800 car garages at $9.0 million through Flint's Economic Development Commission bonding. In return, the Rick Corporation (parking consultant) guaranteed revenues and made a financial commitment to operating reserves and start-up costs.
LOCAL NON-PROFIT CORPORATIONS PARTICIPATING IN PROJECT
The City of Flint will manage "public area site improvement, utility abandonment and replacement, relocation and re-alignment of two existing area streets and construction of a pedestrian skyway system."
(ULI Black, 1981: p.64) The Director of Flint's Downtown Development
Authority will work with both the public and private sector on these projects. A $1 million Economic Development Agency grant has been allocated for operating reserves and start up costs.
Factors Which Made the Riverfront Center a Successful Public-Private Partnership Project
The benefits of the project are diverse. Flint's employment opportunities will be expanded. A requirement of the Community Development Housing Act, in section 3 concerning affirmative action, states that to the greatest extent feasible, low-income area residents in the project area must be provided with the opportunity to fill the jobs in the construction/development phase of the project as well as in jobs generated by the completed project. (Ragsdale, 4/21/82) The hotel/convention center will provide the equivalent of approximately 320 full-time jobs. An effort is being made to hire low income area residents for these positions in compliance with the Community Development Housing Act guidelines. Twenty jobs will be provided by the 10,000 square feet retail space, 500 construction jobs, 175 fulltime jobs due to the Proposed State Office Building, and 250 additional jobs with the 100,000 square feet office building will provide a total of 1,255 new jobs. Not included are 60 jobs from the parking ramp project, and 150 housing rehabilitation jobs which are created yearly in the neighborhoods.
PROJECT OUTLINE: Riverfront Center
Riverfront Center Project
PROJECT INITIATORS PROJECT JUSTIFICATION SCOPE OF PROJECT INVESTMENT SOURCES DEALS PROJECT MANAGEMENT
.Flint Area Conference, Inc. private non-profit development corporation .Mott Foundation .Mayor Rutherford .public sector promoted project to reduce unemployment, to diversify economy and Industrial development to revitalize downtown and neighborhood commercial areas, to improve Flint's public image, to redevelop deteriorating housing stock .390 room Hyatt Regency Hotel incorporating 40,000 sq.ft, of convention space, 1,600 ramped parking spaces, shops, theatres, and a pedestrian skyway system .$6,000,000 grant from Mott to Flint Neighborhood Improvement and Preservation Project. NIPP will loan money to developers, repayments on loan will be used by NIPP for home improvement and rehabilitation loans .$12,000,000 from Northwestern Mutual Life Insurance to provide construction and permanent financing .$6,500,000 UDAG to City of Flint 4.5 million used to cover development costs .$2.2 million for development of a private office building .$6.2 million private investors .$900,000 general partners ($440,000 with interest providing $460,000 from interest) .$9.0 million from Flint Economic Development Commission bonding to cover parking facility costs .$1,000,000 Downtown Development Authority-FDA monies used for operating reserves and start-up costs .Riverfront Center Hotel Associates comprised of 5 corporate general partners: -Flint Renaissance, Inc. -Rivermark -Capital Housing Realty Corporation -CRIMARK .Downtown Development Authority
The Riverfront Center will contribute an annual real and personal property tax of $1,194,096. The project is estimated to bring in $20.5 million in 1978 income dollars annually. Income tax revenues will total approximately $179,375 annually assuming that 75 percent of the employees gaining employment through the development are city residents.
In addition, new developments are now being proposed due to the Riverfront Center, such as a 100,000 sq.ft, private office building south of the Flint River. Three hotel/motel developments are in the planning stages- (ULI Black, 1981: p .66)
The Riverfront Center involved many public and private participants in an intricate funding program.
The effort entailed the creation of a partnership joining the public and private sectors financially, the hotel and convention center, downtown investment with neighborhood investment, non-profit and profit-making groups and majority and minority investors. (ULI Black, 1981: p.59)
The elements of the partnership which facilitated its success are as fol 1 ows:
THE FLINT ECONOMY WAS SEVERELY DEPRESSED WHICH CATALYZED THE
PARTNERSHIP OF PUBLIC-PRIVATE LEADERSHIP AND FINANCIAL RESOURCES.
The declining downtown area was a problem which was affecting the entire city. The community realized that Flint's dying economy would require the efforts of both the public and private sectors to turn around the situation. The problem became a serious concern to everyone which
pressured leaders to take action. The Riverfront Center will stimulate the economy by providing approximately 1,265 new jobs. Additional development has already been proposed due to the Riverfront Center. (See previous three paragraphs.) Flint is also trying to diversify its economy by attracting some of Michigan's tourist industry. Tourists would be interested in Autoworld and the accommodations at Riverfront Center. Three additional hotel/motel developments are also being proposed for Flint.
The Hotel is part of a new industry for Flint. Probably our greatest chance for a second industry is the tourist industry and to have a tourist industry obviously you have to have a place for tourists to stay. Autoworld will be the other important piece of the puzzle and the new retail center will be another piece. In itself, the Hyatt can't do it, but it is the first step in the direction we want to head.
(Ellerbe Review, Vol.3, No.l 1981: p.3)
MAYOR JAMES RUTHERFORD WAS COMMITTED TO THE PUBLIC-PRIVATE PARTNERSHIP AS THE WAY TO ACCOMPLISH THE PROJECT.
Mayor James Rutherford was "the unifying force" behind the project. (Ryan, 4/22/82) Of the seven persons interviewed, everyone stated that the Mayor was "committed" to the public-private concept of the project. His on-going support for Riverfront Center assisted in smoothing out any problems during the project's development. He was particularly concerned that the project not become a divisive issue between the city government and neighborhoods.
Certainly the purpose of Riverfront Center was not to just provide a fine hotel, but to create jobs. And the financing plan will create some money for the rehabilitation of our neighborhoods.
(Ellerbe Review, Vol.3, No.l, 1981: p.3)
THE MOTT FOUNDATION HAD A STRONG COMMITMENT TO THE REVITALIZATION OF FLINT AND PROVIDED A GENEROUS AMOUNT OF FINANCING EXPERTISE AND FUNDING.
Not every city has the advantage of having a foundation such as Mott The UDAG funding requirements established the framework for the financing However, the Mott Foundation provided the financial backing for the gaps in the UDAG. Mott was also instrumental in convincing Hyatt Regency to locate a hotel in Flint. Larry Doyle, Comptroller for Mott, was the designer of the innovative financing.
THE FLINT AREA CONFERENCE INC. (FACI), THE EXECUTIVE PRIVATE SECTOR ORGANIZATION, USED ITS INFLUENCE TO SECURE PRIVATE RESOURCES TO SUPPORT THE PROJECT.
FACI, with assistance from Mott, invested in the planning for the redevelopment project. They were also instrumental in convincing Hyatt to locate a hotel in Flint, in selecting the appropriate developer, Landmark, and in securing private investment for the project.
RIVERFRONT CENTER OFFERED TANGIBLE BENEFITS IN TERMS OF PHYSICAL IMPROVEMENTS OR/AND MONETARY SUPPORT TO THE NEIGHBORHOODS, PRIVATE SECTOR, AND CITY GOVERNMENT.
The project provided some type of return to every participant. The neighborhoods received rehab money through NIPP and technical assistance from FBDC. The private sector was able to leverage their investments with UDAG money as well as improve the downtown economy which would in turn benefit their businesses. The project also encouraged other develop ments to be planned for the area, which would stimulate Flint's downtown and neighborhood economies. The Riverfront Center will help to diversify
Flint's economy. The FBDC and NIPP will have a relatively stable source of funding for the next 40 years. According to Jack Litzenberg, once all three groups realized the project was in their own self-interest, it was fairly easy to get people to work together. (Litzenberg, 4/21/82)
In my opinion, the elements which made the Riverfront Center successful are very inter-dependent. This makes it difficult to select the most critical factors. Flints severe economic downturn acted as a catalyst to bring together the resources of both the public and private sectors. Mayor Rutherford's determination and leadership, to make the project happen, were certainly crucial to the project's success. The Mott support was essential to developing a workable financing plan. FACI provided the private sector leadership required in the UDAG, as well as business influence, to convince Hyatt to locate in Flint. Basically, each partner, out of self-interest, participated in the project, which made people responsive to the various trade-offs involved. The following list has all the elements of the Riverfront Center project. Asterisks indicate the elements which were crucial to the establishment of the partnership:
*1. THE FLINT ECONOMY WAS SEVERELY DEPRESSED WHICH CATALYZED THE
PARTNERSHIP OF PUBLIC-PRIVATE LEADERSHIP AND FINANCIAL RESOURCES.
*2. MAYOR JAMES RUTHERFORD WAS COMMITTED TO THE PUBLIC-PRIVATE PARTNERSHIP AS THE WAY TO ACCOMPLISH THE PROJECT.
*3. THE MOTT FOUNDATION HAD A STRONG COMMITMENT TO THE REVITALIZATION OF FLINT AND PROVIDED A GENEROUS AMOUNT OF FINANCING EXPERTISE AND FUNDING.
*4. THE FLINT AREA CONFERENCE, INC., THE EXECUTIVE PRIVATE SECTOR ORGANIZATION, USED ITS INFLUENCE TO SECURE PRIVATE RESOURCES TO SUPPORT THE PROJECT.
5. RIVERFRONT CENTER OFFERED TANGIBLE BENEFITS IN TERMS OF PHYSICAL IMPROVEMENTS AND/OR MONETARY SUPPORT TO THE NEIGHBORHOODS, PRIVATE SECTOR, AND CITY GOVERNMENT.
The Role of Neighborhoods in the Riverfront Center
Mott, the City, NIPP, and FBDC all agreed that the project was designed by Mott and the City. NIPP and FBDC were asked to participate because they were suitable intermediary organizations through which the funding could be tunneled into the project without conflicting with the Internal Revenue Service rules. The finance mechanism would also funnel resources back to NIPP and FBDC and in turn to the neighborhood. The point of this explanation is to clarify that the neighborhoods did not initiate the project or participate in the design of the project. The broad-based neighborhood participation in the project was lacking. NIPP and FBDC are now taking a much more active role in the partnership by developing and reviewing potential projects with Mott and the City.
Public-private partnership projects require creativity and flexibility. Flint accomplished an innovative large scale downtown revitalization effort. More importantly, Flint is trying to improve the partnership development process by involving neighborhood representatives in the development of projects. As Larry Doyle, Comptroller for Mott, remarked, "Mott would do the same type of project again the project worked so well". (Doyle, 4/23/82)
CASE STUDY SUMMARY ANALYSIS
CASE STUDY SUMMARY ANALYSIS
The summary lists the important elements defined by the three case studies. The list of criteria is divided into categories which relate to the city, neighborhood, and private sector partners. The last category includes factors which facilitate the partnership development process. The following elements comprise the criteria which will be used to evaluate the potential for Denver to implement a successful Triangular partnership.
TRIANGULAR PARTNERSHIP CRITERIA
C-l DYNAMIC LEADERSHIP ON THE PART OF THE MAYOR
C-2 MAYOR'S WILLINGNESS TO USE CITY HALL'S INFLUENCE AND RESOURCES TO ACCOMPLISH PARTNERSHIP PROJECTS
C-3 MAYOR IS ABLE TO BUILD COALITIONS WITH THE BUSINESS SECTOR AND NEIGHBORHOOD GROUPS TO SUPPORT THE PARTNERSHIP IDEA
C-4 THE LOCAL GOVERNMENT'S DECISION-MAKING PROCESS IS REPONSIVE TO COMMUNITY INPUT
N-5 THE EXISTENCE OF A BROAD-BASED NEIGHBORHOOD ORGANIZATION(S) WHICH IS SUPPORTED BY RESIDENTS AND LEGITIMATELY REPRESENT(S) COMMUNITY INTERESTS
N-6 PUBLIC AND PRIVATE SECTORS CONSIDER THE NEIGHBORHOOD ORGANIZATION TO BE A CREDIBLE REPRESENTATIVE OF COMMUNITY INTERESTS
N-7 NEIGHBORHOOD LEADERS ARE EFFECTIVE COMMUNITY ORGANIZERS AS WELL AS EFFECTIVE COMMUNITY REPRESENTATIVES IN NEGOTIATIONS WITH THE PRIVATE SECTOR AND LOCAL GOVERNMENT
N-3 NEIGHBORHOOD HAS ON-GOING STAFF AND TECHNICAL ASSISTANCE TO
COORDINATE COMMUNICATION AMONG RESIDENTS AS WELL AS COMMUNICATION BETWEEN THE NEIGHBORHOOD AND CITY, AND TO MANAGE COMMUNITY PARTNERSHIP PROGRAMS
B-9 PRIVATE SECTOR HAS A NETWORK OF AGGRESSIVE, POLITICALLY INFLUENTIAL LEADERS WHO COMMIT THEIR LEADERSHIP AND RESOURCES TO THE PARTNERSHIP AND PROJECTS
B-l0 THE EXISTENCE OF A PRIVATE SECTOR INTERMEDIARY ORGANIZATION WHICH BRIDGES THE INTERESTS OF THE PRIVATE SECTOR AND THE LOCAL GOVERNMENT IN THE DEVELOPMENT OF PARTNERSHIP PROJECTS
B-l1 LOCAL FOUNDATIONS ARE COMMITTED TO REVITALIZING THE CITY AND WILL USE THEIR INFLUENCE AND RESOURCES TO SUPPORT THE PARTNERSHIP
Partnership Development Process
P-12 THE CITY'S ECONOMIC DECLINE, PARTICULARLY DOWNTOWN DECLINE, CAN
BE USED AS A CATALYST TO CREATE A TRIANGULAR PARTNERSHIP OF PUBLIC-PRIVATE LEADERSHIP AND TO GET BANKS, FOUNDATIONS ETC. TO TAKE ACTION TO SUPPORT PARTNERSHIP PROJECTS
P-13 LOCAL GOVERNMENT, PRIVATE SECTOR, AND NEIGHBORHOODS PARTICIPATE IN THE DEVELOPMENT AND IMPLEMENTATION OF THE PROJECT OR PROGRAM WHICH INSURES THAT THE OUTCOME WILL BE SUITABLE FOR THE COMMUNITY AS A WHOLE
P-14 THE PROJECT OFFERS TANGIBLE BENEFITS IN TERMS OF PHYSICAL IMPROVEMENTS AND/OR MONETARY RETURNS TO THE NEIGHBORHOODS, PRIVATE SECTOR, AND LOCAL GOVERNMENT
P-15 FUNDING SOURCES ARE AVAILABLE TO FINANCE THE PARTNERSHIP'S PROGRAMS AND PROJECTS
Each city is different and must carefully analyze and discuss the partnership idea with relevant groups in order to devise a partnership which corresponds to the needs of that particular city. The criteria, established, here, do not guarantee a successful partnership. However, if many of the factors are lacking, it would be difficult to wield the leadership and financial resources necessary to accomplish a triangular partnershi p.
*Partnership Criteria Key: C represents City Partner
N represents Neighborhood Partner B represents Business Partner P represents Development Process
AN ANALYSIS OF THE APPLICATION OF THE TRIANGULAR PARTNERSHIP MODEL TO DENVER
AN ANALYSIS OF THE APPLICATION OF THE TRIANGULAR PARTNERSHIP MODEL TO DENVER: INTRODUCTION
The purpose of this section will be: to examine the Triangular Partnership model in the context of Denver; to evaluate the success potential of this model in Denver. The Triangular Partnership Criteria will provide the framework for the Denver analysis. A description of the local government, neighborhoods, and private sector leadership groups, and their preliminary efforts to develop a partnership will be discussed. These findings will be evaluated according to the Triangular Partnership Criteria in the summary section.
The Triangular partnership concept is just being developed in Denver. Public, private, and neighborhood groups are discussing the idea's potential at public symposiums, task force meetings, and workshops. An Urban Design Symposium was recently held in Denver. The symposium provided a forum for neighborhoods, local government, and the private sector to discuss downtown development and neighborhood revitalization, in respect to urban design. The Center for Public-Private Sector Cooperation, part of the University of Colorado/Denver's Graduate School of Public Affairs, recently held a three day conference on the effects of the state's economy on public-private partnerships.
Probably the most concerted effort to bring together neighborhoods, public, and private groups was originated by the proposed Triangular Partnership Program. Developed by th U.S. Conference of Mayors and the Mott Foundation, the program was intended to be a pilot study. The program's purpose was to demonstrate the feasibility of neighborhood development organizations, local government, and the private sector combining their efforts and resources to accomplish urban economic (re)-
development projects. The program would coordinate the mutual interests of downtown growth and neighborhood development so that the impacts of growth would positively affect the city as a whole.
The Triangular Partnership Program selected Denver to participate in the program in June, 1981. The Mott Foundation's contribution of $500,000 and HUD's $200,000 initiated the program. $100,000 of the Mott contribution was to be used for National Challenge Grants once the program began. The program had been intended to provide a venture capital pool which was to be the unique incentive to attract participants. However, in October, 1981, the program funds were cut, eliminating the proposed venture capital pool. The Triangular Partnership Program sent a team of consultants to discuss the partnerhsip with Denver's local government, private sector, and neighborhood groups. Denver's leaders were not impressed with the consultants. Further efforts to work with the Triangular Partnership Program in a formal way have been discontinued.
Even though the Triangular Partnership Program was not implemented in Denver, the three sectors proceeded to reorganize their efforts into a new partnership framework. Representatives from the three groups agreed that all three partners needed to be involved in the development of goals and objectives for the partnership. T. Michael Smith, Director of the Center for Community Development and Design at UCD, and neighborhood representatives are organizing the neighborhood organizations. Dick Fleming and Diana Hanna from the Denver Partnership are organizing the business sector. Larry Borger, assistant to the Mayor, will organize a city coalition which would include the Community Development Agency, Denver
Housing Authority, and the Denver Urban Renewal Authority.
It was decided that each partner would first meet separately and address the following issues:
establish their role in the partnership
0 investigate financing alternatives suited to the partnershi p
0 determine what technical assistance resources the group could offer the program
0 write a position paper which concisely states the group's conclusions
Following the separate meetings, a workshop would be held at which each group would present their position paper. The partners would try to establish a Triangular partnership which would reflect the interests of all three groups. The workshop meeting is tentatively set for early summer. The following section describes particular groups within the local government, neighborhoods, and private sector, and their involvement in the preliminary organization of Denver's partnership.
The Local Government's Leadership
Denver's city government is a strong mayoral form of government.
Mayor McNichols has served as the city's Mayor for 13 years. He is considered to be a powerful mayor who knows how to use the political system to accomplish his objectives. The Mayor's power is supported by a cadre of loyal staff. As a result the Mayor has developed a staff who will execute his decisions.
The Mayor's Advisory Council (MAC) is a unique citizen's advisory board which is responsible for planning and allocating Community Development Slock Grants (CDBG) and Urban Development Action Grants (UDAG) and other funding sources. The MAC is a group of 27 appointed members. City Council representatives each appoint one representative from their district and an additional two members at large a total of 13 persons. Mayor McNichols appoints 14 members which have a range of areas of expertise. The MAC holds neighborhood hearings to keep the public informed of MAC activities and to insure that the MAC is aware of local concerns. "In the past four years, the Mayor has rarely overturned a MAC decision (Weis, 1980: p.29).
Larry Borger, Assistant to the Mayor, has taken the responsibility for involving city agencies in the partnership. City agencies which are particularly suited to partnership activities include the Community Development Agency (CDA), Denver Housing Authority (DHA), and the Denver Urban Renewal Authority (DURA). Organizationally, most of the city agencies involved in housing/economic/community development are not coordinated under a single agency.
City Programs and Policies
The City of Denver has developed many programs which are supportive of partnership projects. According to a report from Downtown Denver, Inc.:
Denver's city government has a good track record of local housing, community, and economic development agencies that are well run, spend their monies, and have good leverage records... the city has been effective in.. .obtaining and utilizing Federal programs (HUD housing, CDBG, 312, Urban Renewal,
UDAG, EDA, and SBA).
(Fleming, 1981: p.3)
Examples of these efforts are the $13.5 million UDAG grant which the City obtained to construct the Lincoln Park project, two major HUD innovative grants, and substantial amounts of CDBG monies designated for the Neighborhood Business Revitalization program. The Denver Housing Authority has approximately $10 million in city bond proceeds which may be used as leverage funding for Triangular partnership type projects. (Fleming, 1981: p.8) The Colorado Division of Housing is considering a $100,000 contribution to Piton's Denver Family Housing Authority (DFHC). The city's Community Development Agency is also considering allocating $200,000 to the DFHC.
Land Acquisition Fund Proposal:
CDA is proposing a $2 million Land Acquisition Fund to be allocated in districts 3 (Councilman Sam Sandos), 11 (Councilman Bill Roberts), 9 (Sal Carpio), and 8 (King Trimble). Criteria for allocation of the money are still tentative. The Criteria now state that the fund should:
provide low to moderate income housing for families
be administered in the form of a loan, thereby recycling the funds, instead of providing one-time subsidies
support NDO's that leverage the land acquisition loan with their own NDO funds
be used for infill and rehab housing
The North Denver Workshop and Westside Design are developing a clearinghouse process for neighborhood development organizations (NDOs) interested in obtaining loans in District 9. They are inventorying land, identifying projects and proposed funding needs. The purpose of the process is to avoid the situation where NDOs are vying for the same properties which triggers the artificial inflation of the cost of the land. The Workshop and Westside are also offering technical assistance to interested NDOs. Project packaging, site identification, and site plan analysis are available. North Denver and CCDD's Housing Developer, Fred Kirk, are planning several finance workshops. In order to begin administering the fund, the MAC needs to finalize the application criteria and CDA must give final approval of the contract.
Mortgage Interest Subsidy/Downpayment Assistance Program:
The Colorado Housing Finance Authority (CHFA) is instrumental in providing tax exempt mortgage money which enables many low to moderate income neighborhood housing development projects to become financially feasible. CHFA, a quasi-governmental body, was established by the legislature. Its purpose is to sell tax exempt bonds to the private market. CHFA sells the issues to interested lenders who then provide loans for qualified borrowers. The lender receives the original servicing funds from the loans while using CHFA's money. CHFA played a key role in the Mortgage Interest Subsidy Program.
In April of 1980, Denver received a HUD innovative Grant of $985,000 to
administer the Mortgage Interest Subsidy Program:
$315,000 in Innovative Grant funds were to be used to subsidize the interest rate of 60 Colorado Housing Finance Authority loans. Additionally, 18 CHFA loans were closed without requiring a subsidy. CHFA had set aside $3.8 million in 8.875% mortgage loans for the program. Interest rates were subsidized to as low as 4%, increasing 1/2% per year until the rate reached 8.875%, the CHFA rate.
(CDA 1982: p.3)
Low-to-moderate-income renters ($14,388 to $15,413 average income per year) living in the Lincoln Park, Five Points, and Highlands neighborhoods for at least 90 days were eligible to apply for the loans to purchase homes at an average sale price of $45,896, below the city average of $82,247. (CDA, 1982: p.10-11) The program involved neighborhood development organizations in the home counseling and pre-screening process for potential homeowners. Highlands Neighborhood Housing Services, Expansion Unlimited in Five Points, and Brothers Redevelopment, Inc. in Lincoln Park were the three participating groups. They provided publicity for the program in the community, seminars on budgeting, home purchase and closings, home maintenance, energy conservation and income tax preparation. Counseling was also available to the new homeowner for one year after the home was purchased.
The lenders, including Empire, Majestic, and Midland, processed and qualified loans from Highlands, Five Points, and Lincoln Park respectively. Once the counseling agencies had prescreened the applicant, and the house had been identified, the person was sent to the appropriate Savings and Loan.
(CDA, 1982: p.6) The lenders arranged a Graduated Mortgage Subsidy
Computation Sheet which was used to calculate the subsidy amount. The lenders applied for the mortgage loans from CHFA which was then approved prior to the loan closing.
CDA acted as the liaison among the community counseling groups and lenders. Because the Innovative Grant fund "took on the character of city funds", it was necessary to establish a neutral local development corporation. An account with the Greater Denver Loan Development Company was established with the United Bank of Skyline. (CDA, 1982: p.7)
The Downpayment Assistance Program was added when it became apparent that many individuals were having a difficult time meeting the downpayment and closing costs. The program was funded by a $115,000 grant from Piton and a $10,000 Grant from the State Division of Housing.
According to CDA, the counseling agencies, and lenders, the program had several strong merits.
By focusing on three neighborhoods experiencing displacement, the program was able to facilitate home ownership for low to moderate income families and prevent them from being displaced from rental properties.
Midland Federal reported that 80 to 90 percent of potential homeowners referred through the counseling program qualified as opposed to a 40 percent rate for people referred from realtors.
A high percentage of minority families benefited from the program in contrast to the statistics of other low interest programs in the past due to outreach and one-on-one counseling.
t BRI noted that thirty-six families were leveraged into home ownership for a little more than $113,000. If these families had been put into a Section 8 program for 30 years, it would have cost over $2,000,000.
(CDA, 1982: p.18-20)
This program is an example of a cooperative solution to 1ow-to-moderate income housing needs involving federal, state, city agencies, neighborhood based organizations, lenders, and foundation resources. "Considering the complexity of the program and the number of different participants involved, it is a record worthy of note." (Cupal 9/30/82, p.2)
City Government's Role in the Partnership
The city government has resources which could facilitate a successful partnership. Mayor McNichols has not yet provided the personal leadership evident in other cities (see case studies). Because the Mayor is such an influential political figure in Denver, his support would greatly assist the development of a partnership. He has the power to mobilize city government resources to facilitate a partnership. CDBG and UDAG programs, the $2 million Land Acquistion Fund, and the Denver Housing Authority's $10 million in city bond proceeds are funding sources which could be used for partnership projects and programs.
In cities with an active public-private dialogue, there is likely to be 20 to 25 percent more leveraging of governmental funds.
(Local Economic Development: Public Leveraging of Private Capital, 1980: p.3)
City staff also provide the community with assistance in dealing with government programs. The city could support the Partnership by:
Assuring consistency between defined strategies and city policies.
Making available public sector resources to match or leverage private sector assistance.
Facilitating an efficient development process which responds to the goals and objectives of the Triangular partnership.
Identifying development sites that have potential for joint ventures among the partners.
Establishing development incentives through zoning, etc. which would support Triangular partnership projects.
Colorado Office of State Planning and Budgeting in a report on Reagan's New Federalism shows that Reagan's proposal would:
cost the state $110 million in 1983. Cutbacks in federal aid to local governments would cost another $153.2 million. A $5.4 million proposed cut in employment training programs in Colorado, a $7.5 miilion decrease in Welfare, and a $9 million decrease in food stamps.
The proposed budget cuts will put more pressure on the local government's budget to respond to community needs. If the city chooses to work more closely with neighborhoods and the private sector, some of the burden could be shared financially and administratively. A partnership offers a solution to local governments faced with the responsibility to meet many community needs with decreasing staff and funding resources.
The neighborhood already has a human side, it must develop a business side; government and business have well-developed business sides, they must foster their humanity. When the two are equal, partnership is possible.
(Partners, 1981: p.29)
Denver's neighborhood movement is considered to be a product of the 1970's. In 1979, Inter-Neighborhood Cooperation (INC) was officially formed by Denver's neighborhood leaders. Presently, there are 23 neighborhood organizations represented through INC. A representative number of Denver's neighborhood development organizations (NDOs) and neighborhood associations (NAs) are working on plans for a partnership. Most of the approximately eighteen neighborhood groups represent areas adjacent to the Central Business District. In order to inform NDOs and NAs about the partnership, a notice was sent out to neighborhood groups across the city. Meetings are being held approximately twice a month to define how the neighborhoods would participate in a partnership with the city and business sector.
In February 1982, the neighborhoods formed an ad hoc coalition of representatives named the Neighborhood Partnership. The role of the organization is to represent neighborhood interests in the partnership.
The Neighborhood Partnership will also benefit its members by providing a network for sharing information about projects and other development issues regardless of whether or not the Triangular partnership ever becomes a reality.
T. Michael Smith, Director of the Center for Community Development and Design, has acted as the facilitator for the Neighborhood Partnership The Center for Community Development and Design (CCDD) has provided technical assistance to neighborhood groups for approximately 15 years. CCDD has three community-based technical assistance centers: the North Denver Workshop, Westside Design, and Northeast Denver Neighborhood Development Center. Recently a housing developer was hired to assist in neighborhood development projects. A considerable amount of time and money has been committed to neighborhood efforts to establish a Triangular partnership.
The Center as the prime technical assistance provider for neighborhood organizations, is most anxious to establish a partnership. To see a downtown effort reach out to work directly with neighborhood development groups is an oft waited for action. The Center will commit resources and seek additional resources to support neighborhood development projects.
A position paper was written by the neighborhoods which states the Neighborhood Partnership (NP) viewpoint towards the triangular partnership. The purpose of writing the paper is to provide guidance for the NP and to give the city and private sector partners a clear understanding of neighborhood development objectives. The following points are summarized from the position paper:.
Role of Neighborhood Partnership
To encourage broad based participation in development projects, the discussion of projects in order to improve their chances for sucess and the sharing of technical skills and resources among members to increase the capacity to develop projects which are economically feasible and beneficial to the neighborhoods.
Type of Projects
Encourage mixed use projects, commercial and housing developments
Increase housing choices within inncer-city neighborhoods through new construction with a guaranteed minimum percentage of low-to moderate income units.
Assist deteriorated inner-city neighborhoods to develop by encouraging neighborhood residents and/or minority ownership or business, employing neighborhood and/or minority residents on any construction projects with residents who live in the area of the project.
The Neighborhood Partnership provides an opportunity for a potential project to be reviewed by the coalition to assist in making the project better.
The Role of Technical Assistance
Technical assistance is a way to build technical and developmental capacity in all NDOs and NAs.
Technical assistance should be provided on an on-going basis.
Developing Linkages Between Large and Small Development Organizations
Develop goals and projects which facilitate cooperation rather than competition between NDOs by providing a central information exchange for resources, contacts, and project information, meetings and newsletters to foster communication, co-venture projects between NDOs.
Fostering Integration Between NDOs and NAs
The NDOs have the responsibility to involve NAs in development projects and the NAs have the responsibility to involve the NDOs in neighborhood needs identification.
Neighborhood Partnership Representation
The Neighborhood Partnership invites additional NDOs and NAs to become members.
i Decision-making is by consensus.
(Neighborhood Partnership Position Paper, February 1982)
Neighborhood Policies and Programs
The Ford Proposal:
The Neighborhood Partnership has also taken an active role in shaping two proposals related to Triangular Parnership efforts.
Last fall, Marshall Kaplan, Dean of the Graduate School of Public Affairs, began work on a proposal to the Ford Foundation. The proposal is to research the possibility of tying Denver's downtown growth to support neighborhood revitalization in neighborhoods surrounding the Central Business District.
The work program states that "tax increment financing, use of contributions from business/firm profits; and use of public sector assistance will be evaluated...in terms of leveraging potential, predictability, political acceptability, the ease of implementation, and efficiency and fairness."
(Ford Proposal Work Program 1981: p.2) The funding would provide:
approximately $25,000 to $30,000 to fund a project packaging position at the Denver Partnership
approximately $25,000 to $30,000 to fund a Center for Public-Private Sector Cooperation staff position
approximately $25,000 to $30,000 to be used as money for a technical assistance pool for NDOs
The proposal is presently tabled until the Neighborhood Partnership, Denver Partnership, and Center for Community Development review the proposal. Neighborhood Partnership representatives were concerned about the vagueness concerning who would provide services for each of the partners. It was pointed out that a potential conflict could occur between the ND0 interests and the interests of the organization that the consultant would work for. NDOs would have liked to have been included in the development of
this proposal because the focus of the project is on downtown neighborhood revitalization. However, it was decided that the proposal should be pursued to see what is being offered. At this time, the NP is in the process of defining what technical assistance needs could be met through the Ford proposal.
Denver Family Housing Corporation:
The Piton Foundation is organizing the Denver Family Housing Corporation program. The idea for the project occurred at a meeting between Fern Portnoy, Executive Director of Piton, and Mike Sviridoff from the Local Initiative Support Corporation (LISC). LISC, based in New York City, raised $35 million over the past year, and wanted to put some of that money into a project in Colorado. Jim Pickman, a consultant for LISC, had completed an in-depth study on Denver's housing situation. The report provided the basis for the DFHC proposal. Piton suggested involving the city, neighborhoods, and other private sector representatives in the project.
The DFHC proposal's purpose is to find ways to provide permanent financing that will not make the cost of housing so high that low and moderate income families are unable to own homes. DFHC intends to support: 1) neighborhood groups efforts to find reasonable permanent financing; 2) neighborhood groups interested in working with the private sector; 3) Piton's efforts to expand private sector resources. The DFHC is a second mortgage program, not a development program. It is a response to a specific need for permanent financing. The proposal includes the following tentative commitments:
LISC $300,000; money is in the form of a loan; a consultant,
Jim Pickman, will be provided. The loan is to be matched by Denver's private sector funding.
Piton $250,000; money will likely be in the form of a loan;
it is part of the local private sector match contribution. Piton would like to raise another $100,000.
Colorado Division of Housing $100,000
Community Development Agency $20C,000
The Neighborhood Partnership is now working with Pi ton in developing the proposal through several committees.
Urban Design Symposium:
The NP played an active role in the Urban Design Symposium on neighborhoods and urban design. Allen Gill, Treasurer of Concerned Citizens Congress of Northeast Denver, Kathie Cheever, Chair of INC, and Adolpho Gomez, Executive Director of the Auraria Community Center were panelists. The symposium provided a forum for the neighborhood representatives to publicly state many of the issues related to a public-private partnership. Probably the strongest points expressed at the symposium were:
Allen Gill: Treasurer, Concerned Citizens Congress of Northeast Denver.
Before aesthetic considerations like urban design, neighborhoods have to have basic services, blocks organized, people's needs defined and addressed. (3/9/82)
Kathie Cheever: Chair INC
Developers often approach neighborhoods by saying 'this is what we are going to do to you, now what are you going to do about it?' Neighborhoods don't want to be fighting brush fires or to be viewed as a negative influence on the city's development. As neighborhoods, we need to decide what we want for our community and how we want it to be in the future. (3/19/82)
David Lewis: President Urban Design Associates, Pittsburgh, Pa.
Developers and neighborhoods need to work together in a partnership. Neighborhoods must buy a piece of the action in a project. A meaningful piece of the action means getting money flowing through your neighborhood groups. A shift of power is needed. Neighborhood based development entities must develop from neighborhood groups.
My definition of urban design is three dimensional negotiation among public, private, and citizen groups. (3/19/82)
Gary Long: Director of Architecture, University of Colorados College of Design and Planning
Neighborhood development is the key to urban design and the development of community.
The comments reflect a Triangular partnership perspective. What needs to follow are actions reflecting these viewpoints from neighborhood, private sector, and local government groups.
Neighborhood Role in the Partnership
Neighborhood interests are an important component to the partnership. Neighborhood organizations could participate in a partnership by:
Assisting in defining links between available resources generated by downtown growth and specific neighborhood projects
f Sponsoring development project packages
Broadening neighborhood participation by publicizing how a partnership program could benefit neighborhood organizations
Sharing expertise in project packaging with other neighborhood organizations .
Denver's neighborhood development organizations are in the process of strength ening their abilities to deal effectively with the private sector and local government.
Private Sector Leadership
The Denver Partnership has taken the lead role in invovling the business community in public-private partnership activities. Originally called Downtown Denver, Inc. (DDI), the organization developed because local businesses became concerned about Denver's deteriorating downtown. For many years, DDI had a staff of only two people to lobby for downtown business interests. However, in the late '701s, Denver's booming growth began to alarm the business community. Referring to the sudden growth, Bruce Rockwell, Chairman of Colorado National Bankshares, Inc., and a board and original member of DDI, remarked that "there was a perception that a lot of the growth was occurring without any coordination". (Rocky Mountain News, 3/30/82: p. 4-B)
In 1980, the business community realized that in order to adequately represent their interests, DDI would have to be expanded. Dick Fleming was hired to be the new director. Fleming has been described as "a whirling dynamo of a man, a combination planner politican and supersalesman". (Rocky Mountain News, 3/30/82: p. 4-B) He has had considerable experience in innovative public-private urban revitalization projects. Most recently, Fleming helped to create the federal UDAG program while at HUD. Previous experiences include the Vice-Presidency of Central Atlanta Progress, an organization much like the Denver Partnership, and the opportunity to work with James Rouse, the developer responsible for Baltimore's Harborplace and Boston's Faneuil Hall.
Downtown Denver, Inc. was restructured into two organizations which would
be overseen by the Denver Partnership, Inc.
Under this major reorganization of the existing Downtown Denver,
Inc., a new umbrella private sector center city corporation -
The Denver Partnership, Inc.--will become the parent entity to the existing DDI and to a new charitable, public-purpose cor-poration--Denver Civic Venture, Inc. DDI (financed by business dues) will focus on the "management and operation" of downtown, while Denver Civic Ventures, Inc. (financed via foundations and corporate giving) will focus on broader central city issues through initiatives in planning, urban design, financial and development packaging, and corporate giving. (Fleming 1981: p. 1-2)
Denver's growing business community offers a broad range of leadership and expertise which are necessary to support a partnership. Coors, Johns-Manvi11e, Gates, Ideal Basic Industries, and Martin Marietta are Fortune 500 companies headquartered in Denver. Energy development has brought approximately 200 energy corporations to Denver. Eugene Bowes, Chairman of the Board of the Denver Partnership, appointed a task force of business representatives to work with the Neighborhood Partnership and city task force. The members represent a variety of backgrounds:
Jim Baldwin, President, King Soopers.
Nelson Bowes, Vice President, Bowes and Co.
John Head, Senior Partner, Head Moye Carver and Ray.
Ken Hoaglund, Vice President, Midland Savings.
M.J. Mastalir, Senior Vice President, First Denver Mortgage.
Jim Miller, Director of Tenant Services, Urban Investment and Development.
Bill Saslow, General Partner, Wazee Design and Development.
Bob Wamsley, Vice President, Citicorp.
The purpose of the task force will be to share technical assistance resources with the neighborhoods and local government, and to establish a project review process which would define mutual joint venture interests between neighborhoods and downtown development. Presently, the Task Force is working on a position paper concerning partnerships. The position paper will be useful to the Neighborhood Partnership and city agencies.
The Denver Partnership is also organizing the Denver Business Challenge, similar to the Minneapolis Five Percent Club which is composed
of 45 corporations that contribute 5 percent of pretax profits to philanthropy.
The Denver Business Challenge will encourage corporations to contribute 2 percent of their pretax profits. In addition, the organization will act as a clearinghouse for smaller businesses that would like to contribute financial and staff resources. Assistance will be provided to corporations which would like to set up their own corporate giving programs. Lucien Wulsin, Chair of the Baldwin United Corporation, will manage Denver Business Challenge. A group of Denver chief executive officers has been invited to serve as the leadership group.
The Denver Partnership is a many faceted umbrella organizations which
involves the private sector in creative problem solving. Richard Kirk, Chair
and President of United Bank and Chair of the Board for DDI commented that:
DDI remains an advocacy group for center city issues... but our emphasis today is much more on dialogue with the public sector (on all downtown issues). I think the public sector welcomes that. (City officials) were dealing with issues and wanted the input from the business community.
Currently, DDI's membership includes 300 business representatives. Its budget
has increased from $100,000 in 1980, to $700,000 in 1982. The Denver Partnership's
Board of Directors is comprised of 100 business leaders. The Denver Partnership*
and its branch organizations appear to be capturing the interest and imagination
of the business community.
Private Sector Programs and Policies Involving Lenders
Lenders' Involvement in Community Projects:
The lenders are one of the most influential groups involved in a working public-private partnership. Banks noted for their community involvement are
Empire Savings and Loan, Midland Federal, and United Bank. Each bank has organized divisions to handle community investment.
Empire Savings and Loan through its Community Investment division has accomplished numerous community based projects. The "Dollar House" project was a joint effort involving Empire, North Denver Workshop, Del Norte Development Corporation, and North Denver Gateway, all community based organizations. Three houses located on the North High Triangle Site were scheduled to be demolished by the City of Denver. A north Denver VISTA volunteer arranged for the community organizations to buy the houses for a dollar a piece from the city.
The houses were sold to three north Denver residents who otherwise would have been unable to own their own homes.
Empire Savings has provided loans for similar projects involving neighborhood groups such as Project New Pride, Concerned Citizens Congress of Northeast Denver, and the Home Improvement Association of Metropolitan Denver. The projects are small in scale, yet they are an example of how the resources of the community, city government, and a financial institution can be combined to complete a successful community based housing project.
Lincoln Park UDAG:
Midland Federal through its Urban Lending division participated in the
Lincoln Park UDAG project. This project was one of the first UDAGs to be
awarded to a neighborhood. The $13.5 million was designated for a large scale
revitalizations project located in Denver's near westside community.
Nine million dollars of the UDAG will be used to acquire and clear thirteen particularly blighted areas within the neighborhood and relocate any remaining residents and small businesses.
The cleared land will be sold to a developer who will construct approximately 770 units of middle-income housing at a cost of $25 million. (Weis, 1980: p. 68)
The project, renamed Boulevard Plaza, will include a grocery store, commercial office space, and approximately 1,000 housing units. Midland Federal acted as the originator and servicer for the construction and permanent financing for the first phase of the project, Creekside I, the housing development is located at 11th and Speer Boulevard. Midland also provided land acquisition financing. Bud Brady was the developer who worked in conjunction with CDA, the Action Grant Program,and Brothers Redevelopment, Inc.
Value After Repair Program/Lincoln Park UDAG:
The Value After Repair Program comprised Phase II of the project. UDAG money was placed in a savings account at Midland Federal and used to make supplemental loans to owner occupants to do housing rehab. An appraisal of the rehab work was completed for each house. CHAF provided 80 percent of the loan needed to accomplish the rehab. The UDAG money was used to make the second mortgage. CHFA also paid off both construction loans. BRI provided homeown-ership counseling and technical assistance during construction to residents and Midland Federal.
United Bank and Denver Housing Authority Housing Development:
United Bank has two division which are involved with neighborhood development organizations. The Public Affairs division handles the bank's corporate contributions to neighborhood development organizations. United provided the initial financial support necessary to establish Brothers Redevelopment, Inc., and the Highlands Neighborhood Housing Services, Hope Communities, located in Five Points, had an option on a building. United donated money to cover the interest and option. Special loans are also made to individual NDOs on a case by case basis. CHFA and CDA money is used to supply the loans.
Recipients of this type of loan have been Neighborhood Housing Services, Hope Communities, BRI, Capitol Hill United Neighbors (CHUN), and Organization for Mid-Town Neighborhood Improvement (OMNI).
Presently, United is considering underwriting and providing a letter of credit for DHA's 700 unit low to moderate housing development at 17th and Grant. United's involvement means that the bank would have to make sure that the bonds were sold. Secondly, United would be providing the insurance, in other words, the bonds will be paid off by the bank. The project is being analyzed to make sure that it is economically feasible for the bank to pay the bonds back. Normally, banks only work with FHA insurance in these types of projects. However, with the decrease in FHA insurance, United is trying to find new approaches to insuring projects.
Programs and Policies Involving Foundations
Foundations are an important asset to a community because they can initiate the financial support that would otherwise be difficult to accomplish using only public and business funding sources. Coors, Boettcher, Johnson, Gates, Johns-Manville, and Continental Airlines have major foundations engaged in community development projects. (Fleming 1981: p. 7)
Inner City Parish:
Foundations played a key role in the rehabilitation of Inner City Parish, an ecumenical community center, which offers educational and recreational programs for families and youth in the Westside. Concerned about the increasing deterioration of this historic, stone, gothic revival'church, residents contacted
Westside Design to provide the technical skills necessary to accomplish the renovation. The community and Westside Design created a public relations book let that included a clear statement of what the community needed from potential funding sources. As a result, major contributions were made by Petro-Lewis, Gates, Coors, the Denver Foundation, Pi ton, and many churches and individuals in pursuit of the $400,000 rehab goal.
Piton's Community Development Program:
The Piton Foundation, based in Denver, has recently taken a strong interest in supporting community development. In 1980, 23 percent of the total grants awarded went to community development projects:
The foundation's Community Development program objectives include promoting safe and affordable housing, economic development for low-and moderate-income people ,...increasing the capacity of neighborhood organizations to affect their own destiny, and encouraging central city planning and development. Examples of grant awards include $125,000 to Brothers Redevelopment, Inc. to rehabilitate and build new homes for low- and moderate-income people,...a grant of $47,875 to the Concerned Citizens' Congress of Northeast Denver to develop a community development corporation.
(The Piton Foundation 1980 Annual Report: p. 3)
As mentioned earlier, Piton is in the process of organizing the DFHC proposal. The foundation is looking at DFHC as a public-private program. Its intention is to bring out more money than would normally be available to invest in perma nent mortgage assistance for moderate income persons. As an example, Piton has obtained $300,000 from the Local Initiative Support Corporation (LISC). DFHC is intended to expand private sector interest in housing and other neighborhood economic development programs.
Chamber of Commerce Programs and Policies
Denver's Chamber of Commerce is also actively involved in examining various
economic development issues related to pub!ic-Drivate partnerships. Chief Executive President, Rex Jennings, past President of the American Chamber of
Commerce Executives, has established several task forces. A metro-wide committee of Chamber of Commerce representatives is studying economic development issues affecting the metro area as a whole. The Chamber is represented on the Downtown Housing Task Force which is trying to develop financing schemes to provide affordable downtown housing. The Denver Partnership, DURA, and City and County of Denver are also on the Task Force. A committee within the Chamber is determining what role the Chamber could play in effecting a reduction in housing costs, particularly in the downtown area. Tom Spinks, a member of the Chamber's Economic Development staff, commented that "the Chamber supports the development of a strong downtown economic base, which means that downtown must provide a place to work as well as a place to live". (Spinks, 4/15/82)
The Private Sector Role in the Partnership
Efforts are being made on many different levels to effectively focus private sector resources in a way which will benefit the interests of business, as well as the broader community. The business community is comprised of many different types of business, with various perspectives on the private sector's role in a public-private partnership. The business community has indicated an interest to participate in a partnership with the neighborhoods and local government. (Draft Position Paper Private Sector as Triangular Partner, 4/82)
The private sector could participate by:
Identifying projects that are compatible with neighborhood and downtown interests.
Identifying business leaders that are interested in the collaborative development of downtown and inner city neighborhoods.
Assisting in the development of projects that are economically feasible, marketable and adequately financed.
Providing technical assistance for project packaging.
Developing sustained support among the business community for Triangular partnership type projects.
Setting up a project packaging program sponsored by lending institutions to assist NDOs in developing feasible marketable projects.
Businesses have a vested interest in the image of their city, the areas
immediately surrounding their businesses, and in the type of environment the
city offers business employees. The partnership offers the private sector the opportunity to participate with the other two partners in the development of the city. Kenneth Dayton, of the Dayton Hudson Corporation based in Minneapolis, states:
Business is uniquely equipped to help solve today's complex social problems which government alone cannot do. We have resources and talent, and a reputation for efficiency and effectiveness. According to the polls, the public respects those abilities and supports profits even if they don't always understand them. But the public is challenging us to make our profits responsibly - to be a more responsive
partner in society. (Partners, 1981: p. 31)
EVALUATION OF DENVER'S POTENTIAL TO ESTABLISH A SUCCESSFUL TRIANGULAR PARTNERSHIP
The previous review of Denver's three sectors will provide the background for the compairson between Denver and the Partnership criteria. Four areas will be evaluated: the city partner, neighborhood partner, private sector partner, and partnership development process.
C-l. Dynamic leadership on the part of the mayor.
C-2. Mayor's willingness to use city hall's influence and resources to accomplish partnership projects.
C-3. Mayor is able to build coalitions with the business sector and neighborhood groups to support the partnership idea.
C-4 The local government's decision-making process is responsive to community input.
Denver does not have the strong leadership of Mayor McNichols to support the partnership idea. Larry Borger, assistant to the Mayor, is responsible for determining what role the city government will take in the partnership. At this point, Mayor McNichols has not been personally involved in the efforts to establish the partnership. Borger's position is that city government will be willing to meet with the business and neighbor hood groups to discuss how city government could facilitate the partnership Participation by the city would be determined by specific requests for assistance .