An emerging approach to the classic public-private partnership (PPP) is a new model for getting projects designed, funded, approved and built. Rather than pursue water needs only in conjunction with mutual agencies or other well-trodden ties, innovative water planners and engineers are widening the partnership circle to consider every conceivable constituent to a proposed project, whether public or private, nonprofit or for-profit, locally or nationally focused.
These 360-degree PPPs are different because they take a wide, holistic approach to a community’s resources, with the goal of leveraging every square foot of space and every dollar for dual, triple, quadruple and more uses.
Any group with a need or objective, if brought to the table early enough, can be seen as a partial funding source that stretches dollars to new heights. And it is not just for the money: Partnerships can turn adversaries into supporters.
A Dramatic Opportunity for Innovative Collaboration
A 360-degree, open-eyed analysis of a property’s or a creek’s adjacencies can reveal many potential partners. On the public side, they could include transit agencies, schools, parking authorities, parks departments, power agencies, port authorities and quasi-government entities such as utility districts or tax-increment reinvestment zones. The private sector possibilities are endless: housing developers and their resultant homeowners associations; commercial real estate office, retail and industrial properties; resorts and golf courses; apartment buildings; civic groups; land-preservation trusts; and even duck hunters committed to creating bird habitat.
A multiuse approach to water treatment is limited only by the partners’ creativity. Their openness can bring creative solutions to the fore, including the following:
- Water-polishing wetlands that double as green parks, hiking areas and animal habitat, enhancing nearby communities;
- Water conveyance systems— once automatically designed as underground pipes, concrete-lined canals and tunnels—developed as streambeds that create flourishing creeks and ecosystems for public enjoyment; and
- Water detention systems or creeks that “carve into” or share space with parks, utility infrastructure corridors, roadways, athletic fields, etc.
In fact, the current funding environment in the U.S. is unfolding as a dramatic opportunity for innovative collaboration on a new scale. Water departments and agencies are, in many respects, in a golden age that welcomes innovation even as new funding flows from federal and other sources.
The U.S. Environmental Protection Agency practically has mandated innovation for one-fifth of the stimulus spending on water projects. Of the $6 billion of American Recovery and Reinvestment Act (ARRA) of 2009 funds aimed for clean water and drinking water capitalization grants through Sept. 30, 2010, the agency said in a policy letter: “To the extent there are sufficient eligible project applications, not less than 20% of the funds shall be for projects, or portions of projects, that include green infrastructure, water or energy-efficiency improvements or other environmentally innovative activities.”
The ARRA is in full swing, with allocations ranging from California’s $280 million to $19 million each for Delaware, Idaho, Montana, Nevada, New Mexico, North Dakota, South Dakota, Vermont and Wyoming.
Other stimulus funds are being allocated with an eye toward joint venture and innovation, such as the U.S. Department of Transportation’s (DOT) $1.5 billion in allocations. DOT spending is not just for highways, but also is aimed at streetcars, pedestrian/bicycle paths, multimodal transit centers and transformation of automobile-oriented arterials into “complete streets” with green components—opportunities for multiuse partnering with other public-private needs, including water agencies.
Promenade Partnership
A five-year-old street section of the Buffalo Bayou Promenade in Houston is a model 360-degree PPP. It involved nearly two dozen constituents in planning and execution, and today it provides benefits to an equally diverse set of users. From a water agency perspective, the promenade project has improved water quality while better accommodating storms with minimal impact.
For most of the year the formerly trash-strewn waterway under an interstate freeway serves as a major urban park with public amenities, including acres of grassy open space, a public amphitheater, walking/running paths, boating, a skateboard park and a photogenic gateway seen as a jewel of downtown Houston’s resurgence.
Adjacent neighborhoods that for decades had turned their backs to Buffalo Bayou now are clearing away view corridors, adding entry points to access the park and enjoying property value enhancements. As planners pointed out at the inception of New York City’s Central Park, property values around such amenities often become the highest in the city, benefiting city coffers and offsetting the original expenditures.
Perhaps the most illuminating aspect of the promenade project was the leveraging of public and private funds across several entities. Among the list are local agencies such as the Harris County Flood Control District and the City of Houston Parks and Recreation Department; nonprofits such as the Buffalo Bayou Partnership; local philanthropic foundations; corporations; and high-level agencies such as the Texas Department of Transportation and Port of Houston.
Additional phases of the Buffalo Bayou Master Plan, which covers 10 sq miles, are underway.
From Impaired Ecosystem to Invaluable Development
Another model 360-degree PPP can be seen in a major 3,500-acre housing development in southern Texas called Shadow Creek. Developers recognized its growing area had significant challenges, including a denuded, damaged ecosystem and an outdated water treatment capacity.
Pearland, Texas, the local municipality, created a tax-increment reinvestment zone that relieved near-term tax obligations for the developer while also holding the firm to delivering value from its development plan. The developer advanced all of the funds needed to build the master-planned community. The city of Pearland offered a developer reimbursement agreement for $200 million of the development costs. Under the performance-based reimbursement agreement, the developer was reimbursed only after the new incremental values were realized.
Since project inception in 1999, more than 4,500 new homes, parks, schools, hospitals and a major lifestyle retail/office development have been created. Today, this maturing new community has an estimated aggregate property value in excess of $2 billion.
The new community created shared amenities and services that go beyond its boundaries. More than half of the land—some 1,750 acres—is a combination of lakes, park space, creeks, animal habitat and open space. Residents buying into Shadow Creek also buy into the community’s environmental and sustainability attributes, instilling a fundamental education to young and old that new development can complement and balance with the natural environment.
Another contribution of this PPP was the design of a chain of lakes within the development that pull water from Clear Creek, providing water quality benefits and reduced downstream flooding to the east. This public-to-public partnership was made possible thorough cooperation between the U.S. Army Corps of Engineers, Harris County Flood Control, Harris County and the city of Pearland.
Far-Reaching Benefits
These 360-degree PPPs are growing as public agencies, planners and elected officials see the significant benefits of broader, coordinated, high-impact planning. As officials involved with such innovative programs can attest, a completed project that enjoys wide support not only as a water project but as a park, playfield, wetland habitat or neighborhood amenity is a win-win public-private venture with long-term benefits beyond its original scope.
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Funding a Fairgrounds Overhaul
In California’s San Francisco Bay area, the County of Solano and the city of Vallejo have embarked on an ambitious public-private approach to redeveloping the 160-acre Solano County Fairgrounds, located at a key crossroads of two major freeways in Vallejo.
In 2008, the county funded a multijurisdictional visioning process for the underutilized property that involved the county, city, fair board, regional transportation and water agencies, private developers, adjacent homeowners and the neighboring Six Flags Magic Kingdom, a major attraction and employer in the area.
The ensuing plan, unanimously approved by local officials, envisions the creation of a “Fair of the Future”—an entertainment-oriented, mixed-use development centered on two restored and daylighted creeks that will serve as amenities, natural resource corridors and water quality treatment for the site. Historically, the creeks had been diverted into pipes and ditches. Polluted storm water from the fairgrounds, horse stables and racing operations have had a significant detrimental impact on Lake Chabot, an important water storage reservoir adjacent to the site.
The Fair of the Future plan of 1.6 million sq ft includes major exhibition halls, updated multiuse fair and community facilities, multimodal transit and parking facilities, retail and hotels that will be developed and operated privately under long-term leases. Tax-increment financing to fund initial improvements is projected to be paid off within eight years of project commencement, with significant revenue flowing back to the city and county thereafter.
Adjacent commercial real estate is another avenue for PPPs. A proposed 24-acre, mixed-use retail/office development, Regent Square, will be developed along Allen Parkway in Houston adjacent to Eleanor Tinsley Park. The park, which has virtually no parking on site, has grown in popularity to include events that sometimes draw tens of thousands of participants. A creative approach made the two entities joint partners through a shared-use agreement for a large parking garage in the developer’s project—office parking during work hours, and off-hours parking totaling 200 spaces for events in the nearby park.
The developer also is making offsite improvements to the city’s storm drainage system and public streets as a part of the developer reimbursement agreement. Again, this agreement is structured on performance-based criteria. The developer advances the funds and receives a $10-million reimbursement after the new taxable revenue is generated from the project. Plus, the city would receive sales tax growth as well as the creation of 2,000 permanent jobs and 5,000 construction jobs. The first phase of the project is estimated to generate more than $450 million in increased property values.
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