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The Many Ways to do Public Private Partnerships

LOS ANGELES—As local governments face increasing budget pressure, and as tools such as tax increment financing face increasing political hostility, there are opportunities for private developers to partner with public agencies, say sources in this EXCLUSIVE column.

By Grace Winters, associate, and Tom Muller, partner of the real estate and land use practice at Manatt, Phelps & Phillips LLP | Updated on June 13, 2014

LOS ANGELES—As local governments face increasing budget pressure, and as tools such as tax increment financing face increasing political hostility, real estate developers should remember that there are many opportunities for private developers to partner with public agencies to finance and build projects. There is certainly a great need for help in rebuilding and upgrading infrastructure and utilities, and the lack of available state and municipal funding for public improvement projects will mean great opportunities for developers through public private partnerships. 

One of the most common approaches to public private partnerships is based on tax incentives, such as property or sales tax reimbursement agreements, tax increment financing, payments in lieu of taxes, and tax credit financing, among others. Under such arrangements, the developer can be reimbursed for all or a portion of its development costs from the new taxes generated by the completed project or can enjoy tax abatements or tax credits (e.g., energy tax credits) for the project. 

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