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Investing In Public Development: Spending With Purpose

May 9, 2014  |  Kirby A. Glaze
Duluth’s City Hall, a 44,000 square foot Georgian revival style municipal facility built in 2007 was built with a design life of 150 years.

“We’re not building the Taj Mahal.” Have you ever heard a public official use those words to describe a new public project? The reference is to the perception of opulence, a monument to one’s own self-importance. But in not building the Taj Mahal, what are we building? Over the past 50 years there appears to have been a movement in local government to functionality, providing only that which is basically required. This is nowhere more evident in how we choose to spend money on public space in our downtowns. It appears that decisions on public space are being driven by budget concerns, a process more concerned with limits on spending than return on investment. Such is not a condemnation of public officials, but rather a reflection of the attitudes imposed by we the voting public. We have forgotten that spending and investing are two different activities. Spending should be constrained, but investing should be encouraged.

Economic development is most often discussed by government in terms of encouraging investment by the private sector, but what about investment in development by the public sector? Every time a local governing body builds a road, lays a sewer line or builds a public building it is in the development business; investing capital in the improvement of real estate to create value. However, we seldom approach public works as development. The primary purpose of development is to create value. The public sector realizes that value in ways other than monetary profits.

One of the more popular terms today is “sustainable.” We speak of sustainable development, sustainable communities and sustainable buildings. We use the term to describe things that are energy efficient, environmentally sensitive, architecturally lasting, but Webster defines the term as meaning, “able to be used without being completely used up or destroyed.” When we approach public space from a spending perspective we consider how we can meet the im-mediate need at the least expense, including where is the cheapest and easiest place to build. When we approach the same project from an investment perspective we consider how we can get the greatest return in the future on the dollars we spend today. That means designing and building, not just for today’s needs, but the needs of future as well. Will our public structures of today meet our public needs in 10, 20, 30 or more years? Are we investing to achieve a sustainable value?

Any good development creates value, not just in the real estate that is being developed but in the surrounding real estate. This is nowhere more evident than in downtowns. Most private developers recognize this and seek to recover the value they have created in the surrounding properties by owning or controlling them. The public sector however seldom strives to capture that value. While it may not be fiscally responsible or politically palatable for a local government to acquire properties surrounding a public project, it is not only appropriate to plan for such but perhaps irresponsible not to do so. If public funds have been invested to create value, the public should benefit from such. Have we planned for what is to become of those surrounding properties? How might they be developed to best serve the needs of our community and what steps have we taken to insure such development?

Finally, government’s role is not just functional, it is aspirational as well. Government is the reflection of the standards of the community. When local government develops it makes a statement about the community’s expectations as to how and where others should develop. If we develop by spending only what is required to meet the minimum need, then we are telling the private sector that it is alright in our community to spend only what you need to meet the bare minimum standards. Our public space defines our expectations. We should never expect someone else to invest more in our community than we are willing to invest ourselves.

Perhaps when we use the example of the Taj Mahal we are viewing it from the wrong perspective. Yes, it is opulent; it is grandiose; but it is also over 360 years old. It was begun 144 years before this country was founded. The investment has created lasting value. By the way, four of the 10 oldest buildings in the United States are government buildings, including the Palace of Governors in Santa Fe, New Mexico. Built in 1610, it is the oldest continuous use public building in the country.

The next time you are considering a public project don’t ask yourself, “What will my constituents think?” Instead ask yourself, “What will my constituents’ grandchildren think?”

Kirby A. Glaze is President and Founder of Public-Private Partnership Project Management, Inc. (4PM) and Community Development Partners, Inc. (CDP), as well as Of-Counsel to Glaze and Glaze, Attorneys at Law. Over the past 10 years Glaze has help create more than $50 million in new development in Georgia’s downtowns.