Thursday, January 29, 2009

Maritime Park

Our council workshop on the maritime park was long, but there were many good comments and concerns raised. During the meeting we focused on a rough draft agreement which had obvious holes, holes that everyone knew needed to be filled. I am confident that we will have an agreement that meets most concerns soon.

A number of good questions have been raised, and over the next few days I plan to address some of them here.

1. Why would we want a master developer who handles both public and private improvements, acts as general contractor, and manages the property?

This type of an arrangement does sound daunting, to be sure. We are handing over a lot of control. However, this park is not the first place where something like this has happened.

There are a number of projects that are similar to this. Some, which are more retail oriented include Faneuil Hall, Boston; Horton Plaza, San Diego; Plaza Pasadena, Pasadena; Town Square, St. Paul; Pike's Market, Seattle. All of these projects were built as public private partnerships with a master developer similar to what is being considered here, and we can look at their experiences to guide our project.

This arrangement gives the developer the potential to bargain to bring a vibrant mix of retail, office, restaurant, and other tenants.

The developer has relationships with possible tenants. In working with tenants, new ideas about the arrangement of the public and private portions may be explored. Perhaps a tenant wants to ensure a certain amount of parking near one structure, so the developer might nudge another building and a road to make room. If the developer has control of both parts, then these ideas could be brought to fruition. [In our case, "control" is limited. All changes will come before the CMPA board.]

In addition to the actual layout and construction, the developer might want to recruit a national chain to "anchor" the development. Malls traditionally offer low rent to anchor stores, making up that loss through increases on the smaller stores. By having control of all the private development, the developer is better able to cushion a loss in one area by making it up in other areas. By bringing in a national chain, the developer can attract other businesses that will appreciate the foot traffic that chain will bring to the park.

Having the developer act as general contractor, we can expect some efficiencies and cost savings.

If the developer is the general contractor, there should be faster action on getting construction moving forward. Additionally, the developer can subcontract different portions of the project project-wide (or at least wider than a single portion) and potentially realize some savings.

The developer has the greatest motivation to have the project managed to high standards.

The developer wants people to be coming to the park so that they will shop at the stores and eat at the restaurants, which will bring more shops and restaurants, which will bring more offices. The city, of course, wants that too. However, it is easier for the private developer to sell the private improvements when he can say how the park will be managed. In the case of Faneuil Hall in Boston, Rouse Company went to Disney to learn how to maintain a public space to high standards. At the time Faneuil Hall was in a gritty, run-down part of Boston. Rouse needed people to feel that this development was pristine, that the city was not all grime. He, at the time, had no experience maintaining such a property (suburban malls do not attract the range of clientele that an open city thoroughfare does), but he knew that he couldn't get stores if he couldn't say that it would be maintained at higher levels than Boston was maintaining the rest of their city streets.

Enough discourse. If you are interested in the park, I highly recommend a book I recently read called Downtown, Inc. which gives good background on projects like what we are undertaking. I am really excited about the park and am glad that I am on the council in time to bring it to fruition.