They say you can’t fight city hall. But sometimes, a developer can buy city hall and tear it down.
More South Florida government bodies – such as cities, counties, school boards and public colleges – now pursue real estate deals for public facilities through public-private partnerships (P3s). These deals can revitalize city centers and create economic activity on sites that were underutilized – and they usually result in nicer digs for government.
This sometimes results in the developer building government facilities at no cost to the public, as long as there’s a profitable component for the developer, such as apartments or a hotel.
Some of the most well-located parcels in the tri-county region are occupied by city facilities, many of which are outdated. Turning over part of those public sites to developers and replacing parking lots with garages could unlock the value of these parcels and put them on the tax rolls.
Inking a P3 can be complicated. When a developer negotiates a purchase contract, it’s usually behind closed doors, not in a chamber full of residents waiting to weigh in.
&ldquop;Developers are looking for deals and, as long as the economy is strong, people are commanding more money for their properties than they may be worth,&rdquop; said attorney Keith Poliakoff, of Saul Ewing Arnstein & Lehr in Fort Lauderdale. &ldquop;By doing a P3, a developer can negotiate with a government entity that hasn’t artificially inflated the value of the property. And you may be able to get a property that you otherwise could not get.&rdquop;
Opportunities for cities
Boynton Beach was in need of a new City Hall and police station to replace aging buildings. After reaching a $241 million P3 deal with E2L Real Estate Solutions, the city will receive a new slate of municipal buildings while the developer builds a mixed-use project.
Boynton Beach Town Square is one of the largest examples of how cities have partnered with private developers on public land. P3 deals to redevelop public facilities have also been approved or proposed by Broward College, Miami-Dade County Public Schools, and municipalities throughout the tri-county region.
Boynton Beach City Manager Lori LaVerriere said the city owned valuable real estate on Boynton Beach Boulevard that wasn’t generating significant taxable revenue. At the same time, it needed new municipal buildings. Its request for proposals (RFP) was fairly flexible in how much land the developer would acquire from Boynton Beach, and the city made it clear it was willing to share in the funding with the developer, she said.
Maitland-based E2L won the RFP and acquired 16 acres. The developer knocked down the old City Hall and police station. The city and police force currently lease temporary space. E2L is building Boynton Beach a City Hall, police station, fire station, library and parking garage, plus it is renovating a historic high school into a cultural center. In turn, E2L will build apartments, retail space and a hotel.
Boynton Beach will own the municipal facilities at the end of a 25-year lease with the developer. A portion of the development was funded through a $76 million city bond.
The private development should add about $125 million to the tax rolls, with the resulting revenue just about offsetting the bond payments, LaVerriere said. While the P3 process was more complicated, the city couldn’t have afforded to do it otherwise, she said.
“We are getting more bang for our buck having utilized the private money and private industry to build it,” LaVerriere said. “We are all sharing the risk in this.”