Visionary developers are being courted aggressively by city leaders throughout the country.  They are also in high demand by other public officials, including university planners, transit authorities, county officials, school administrators and public hospital leaders. There’s a reason for this new popularity – mixed-use development has become one of the hottest new tools for generating revenue that public officials badly need.

Urban developments are the perfect vehicle for blending together retail, housing, entertainment, parks, health care and cultural facilities to create “communities” that attract people and businesses. This type of project is every municipal leader’s dream because of the benefits that are possible.

New development projects increase property tax and sales tax revenues.  They result in economic stimulus that lasts for decades.  And, if these projects are collaborative in nature, they also produce new revenue streams for cities.  Falls Church, Virginia, analyzed eight mixed-use developments recently and reported that the projects generated $3.8 million in net revenue annually. Gross revenue of $10.6 million per year was generated by the projects when all city tax sources were included.

Benefits that result from mixed-use developments include alternative funding, new jobs, an economic stimulus for the entire area, an enhanced citizen environment and often an expansion of public transit. That’s hard to replicate with other projects.

Government leaders are aggressively pursuing all types of alternative funding and development projects are one of the most attractive options.  The many incentives for private-sector investors to provide capital for collaborative joint ventures enhance interest from both public- and private-sector potential partners.

construction Developers are in high demand!A $20 million mixed-use development in Flint, Michigan, benefited from a $7 million performance-based loan from the Michigan Economic Development Fund. The housing and retail development project includes a four-story building with both retail establishments and townhomes. More than 90 housing units, half of which are designated as affordable housing, are part of the project as well as parking for 100 vehicles. The city will benefit from property tax payments each year and sales tax receipts from the retail establishments. Additionally, developers expect 20 full-time jobs to be created with a large portion of worker wages circulating back into the local economy.

In Fort Worth, the TEXRail commuter rail line slated to open next year is already opening up a myriad of development opportunities along the route. Plans for a $94.2 million mixed-use, multi-family development near the city’s current Texas and Pacific Station have been announced. The development will feature housing, street-level retail and a child care center. A parking garage and hotel are both proposed. The development resulted from a partnership that includes the city, the housing agency and Trinity Metro.

With financial support from the Redevelopment Grant Program of the Minnesota Department of Employment and Economic Development (DEED), a $25 million- $35 million mixed-use redevelopment project in Edina will result in 46 mixed-income apartments with adjoining retail space. The city will match the grant funding through tax increment financing.  Redevelopment program leaders describe these grants as a good use of taxpayer funds, noting that the latest $2.16 million in grants attracted $151.8 million in private investment.

City officials in Ann Arbor are evaluating options related to a proposed mixed-use development that would create 100-200 affordable housing units and space for community events and meetings. One option under consideration is a public-private partnership that would include the city, the transportation authority, the district library and the Downtown Development Authority. This proposal would allow the city to retain ownership of part of the property and generate revenue through an annual lease agreement for buildings on the property. Another option would be to allow a private-sector partner to fund the entire project, assume all the risk and make it possible for the city to generate additional tax revenues in the future.

The city of Augusta, Georgia, is investing $14 million in a $94 million residential, office and retail project planned on the city’s riverfront. In Harper Woods, Michigan, city officials are discussing a public-private partnership for a mixed-use development that includes a new city hall and 700 apartments and row houses. A hotel and restaurant may also be included.

Interest in mixed-use development continues to grow.  Visionary developers will continue to be in high demand for many years… and not just with cities.  The benefits that mixed development projects deliver are attractive to universities, public hospitals, counties, transit authorities and community colleges.

SPI’s newsletters are excellent sources of government procurement information. Subscribe here.


Mary Scott Nabers

As President and CEO of Strategic Partnerships, Inc., Mary Scott Nabers has decades of experience working in the public-private sector. A well-recognized expert in the P3 and government contracting fields, she is often asked to share her industry insights with top publications and through professional speaking engagements.