There is an increasing trend in the development community toward public/private partnerships, but some developers eyeing such projects in Las Vegas seem to have forgotten that public includes the general public, not just city governments.
The public, which often views such partnerships as prime opportunities for corruption, becomes even more skeptical when the developer is mum about its plans.
The idea behind a public/private partnership is for private developers to join with a local government to create a project that is beneficial for both parties. The projects can take many forms.
Sometimes the city will engage in a joint deal in which part of a parcel is developed for a municipal use, while the rest becomes a private project that benefits the developer. Often the private project will provide jobs and lead to revitalization of an area, which ultimately benefits the community. The recently announced deal with California-based developer CIM, which includes the Lady Luck and the post office block on Stewart Street, is an example of this type of project. CIM owns the Lady Luck and would renovate that, and buy a large portion of the post office block from Las Vegas for a retail and entertainment district. The city would keep the old post office building and continue converting it into a mob museum.
There are also deals in which a private developer includes buildings with a municipal use as loss leaders, projects built at or below cost, because of the overall benefit to the project. Cleveland-based Forest City Enterprises is developing this type of project along Main Street. Although some would argue this is not a true public/private partnership, the city would get a new City Hall, essentially at cost, as part of this project. A local transit terminal is also part of the development, so there is a huge municipal benefit there.
In some cases, the municipality will include loss leaders in a private development project for the same reason. Union Park, which is being developed on 61 acres owned by the city, includes the Lou Ruvo Brain Institute and the Smith Center for the Performing Arts. Scott Adams, Las Vegas' business development director, has identified both projects as loss leaders that were included to add value to the project and enhance the city's reputation.
The brain institute, he said, will increase the region's profile in medical research, while the Smith Center will provide an off-Strip venue for cultural events.
At the International Shopping Center Convention that took place in Las Vegas in May, public/private partnerships were identified as a crucial tool for communities looking to attract developers.
David Wallace, former mayor of Sugar Land, Texas, said his city has long welcomed public/private partnerships and has a healthy local economy today because of it. Developers in the audience at Wallace's presentation said Sugar Land is the exception and other cities are reluctant to enter into such projects because of public and media scrutiny.
In Las Vegas, however, it is the developers that have kept mum, while the city government takes the heat and defends the partnerships here.
The city has been criticized for its involvement in both the CIM and Forest City projects recently while the developers that have received its unfailing support reveal almost nothing about their plans.
CIM bought the Lady Luck a year ago and promised swift progress at the casino, which has been closed since February 2006, as well as additional development in the area.
Despite repeated media requests, the group refused to provide any details about progress at the site or even to talk about its development strategy in Southern California, which it has said it plans to incorporate here.
At a Las Vegas City Council meeting earlier this month, Adams again asked for and got the support of the council for the newly introduced CIM project. The project includes the renovation of the Lady Luck and the adjacent retail/entertainment district and although renovation and construction estimates were provided few specific details were included in the presentation.
The city was criticized in the media for the proposed sale price of the land, which was below projected assessments and because the developer would not begin renovations until December 2009.
Adams defended the city's decision by pointing out that the land assessments were inflated because of a few transactions above the market rate in area and gaming, which is not indicated in CIM's proposal, was part of the assessment criteria. He also said CIM's track record of delivering on its project made it worth the wait.
A few words from a prominent CIM representative backing up Adams's assessment and a glimpse into its plans (or even its former projects) would have certainly helped defray the criticism. As yet, however, it has provided nothing except its vague council presentation.
The city administration also took heat for its participation in the Forest City project.
The criticism included arguments that the city doesn't need a new City Hall or that Las Vegas Mayor Oscar Goodman just wants the building as the crowning achievement of his tenure in office. There was also the contention that nobody does something for nothing and that Forest City simply included the City Hall in the project to curry favor with city officials.
Again the developer said nothing.
Attempts to contact Forest City officials in Cleveland, in Las Vegas at the shopping center convention and at its office in California to provide details about the project were rebuked. Almost all of the details released to the media for this project have come from city officials.
The city is always going to be perceived as having an agenda, especially when a project includes a new building or a development project focused around the mob museum, which is one of Goodman's pet projects. But when high-profile developers with proven track records provide solid information backing up the city's position, it adds a lot of credibility.
Of all the projects mentioned the one that on its face seems the most unlikely, but has received the least criticism lately, is Union Park.
This is a city-owned parcel, with development partner Newland Communities acting as the middleman on the project, and a group of developers that seems to have almost nothing in common.
The mixed-use project includes the brain institute, the arts center, hotels, residences, office space, a park, a jewelry center and a casino. Talk about an odd mix of uses.
Its World Jewelry Center is a key component of the project, yet is probably more fragile from a financing standpoint, than almost any other part of the development. The residential component has been identified as crucial to the project's success as a 24-hour destination, but the residential housing market is in chaos. Yet, people seem to believe in the potential for success at Union Park as much, if not more, than the other projects mentioned.
Maybe that's because Newland Communities has been very open about the project, including its potential pitfalls and development setbacks. Newland's Rita Brandin, the point person on the project, has opened her door to the media and through them, to the general public.
Challenging components of the project - such as the ambitious, some might say unrealistic, jewelry center - are spoken about candidly and status updates have always been provided when requested.
Of course, developers can use whatever strategy they choose in introducing a project and both Forest City and CIM have solid track records. Still, when there is a public component to a project, it would seem keeping the general public in the loop is a great way to enlist support and silence critics.
Las Vegas has been the type of partner developers say they want, willing to back projects and take whatever criticism comes with that support. Instead of helping to answer critics, however, the private developers on these projects have left city officials twisting in the wind.
We're not asking the developers to reveal company or trade secrets here, just a little one-on-one time with people familiar with the development strategies, so the general public can feel it really is a partner here.
Obviously, any journalist would love to be the guy that gets the scoop on these projects, but at this point it's just important to just get some information out there. How about it, guys?