As municipalities, state agencies, and educational institutions look for creative ways to fund needed capital improvements, leveraging the value of underutilized real estate assets through commercial development is a viable strategy. But is this really a Public-Private Partnership (P3)? In the case of the The City of Falls Church’s Little City Commons project, the answer is YES.
Here is how the City of Fall Church’s project aligns with the National Council for Public-Private Partnership’s (NCPPP) criteria for a P3:
NCPPP P3 Criteria
Does the City of Fall Church Project Meet the Criteria?
A contractual agreement between a public agency (federal, state or local) and a private sector entity
Yes – the City will enter into a Comprehensive Agreement and a 99- ground lease with the private partner (EYA/PN Hoffman/Regency)
The skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public.
The City is contributing the land;
The private partner is contributing capital and real estate development and operational expertise;
The project will fund the development of the new high school and provide civic space
Each party shares in the risks and rewards potential in the delivery of the service and/or facility.
The City and Private developer share in development risk as the City receives payments over time and as phases of development are completed.
City shares in long-term upside through on-going capital events fee.
The City’s 10.3 acre site, which would begin development in 2021 after a new $120 million George Mason High is completed on adjacent land to its west and the current school is demolished, could yield to the City upwards of an estimated $6.374 million in revenues annually, according to a report from the City’s consultants on the project, Alvarez & Marsal. At that level of annual yield, it would cover virtually the entire City debt service obligation on the $200 million school bond approved by City voters by a 64 percent majority a year ago. -- Falls Church News Press