Creating public/private partnerships is a proven method for a municipality to provide needed services and to foster economic development. In recent years, public/private partnerships are increasingly being created to encourage retail development.

If you "Google" the phrase "public/private partnerships," you'll get thousands of examples of projects between the public sector and the private sector. Most often these are huge infrastructure improvements such as toll roads, subway systems and wastewater treatment plants. The term "public/private partnership," often abbreviated as "PPP," usually refers to an arrangement between government and private companies for the purpose of providing public infrastructure, community facilities and public services.

Retail development projects aren't usually thought of in these terms, but we believe they should be. A well-planned retail development can provide a much-needed service to the community, while boosting sales and property tax revenue.

Despite the difference in outcomes and sizes, all public/private partnerships share the same basic premise: Each party works toward a common task, while assuming risks and anticipating rewards. We have observed a recurring pattern that the communities that enjoy a positive relationship with the private sector have the unique advantage to set and achieve long-range goals.

Most public/private partnerships for retail development share similar challenges:

Challenge #1. The natural tension between the two parties. The public and private sectors are often adversaries instead of partners. The public sector usually regulates things such as building codes and zoning permits. The private sector often sees these regulations as restrictions on their projects.

When a municipality woos a developer on a pubic/private project, it can be seen as something like the school bully inviting a friend over to play; it's clear that the bully is going to get his way and win every game.

Solution: To avoid this conflict, the public agency must soften its "bully" image. I wrote last month about how municipalities can become more developer-friendly. Taking action in this area is a good way to overcome this challenge.

Also, remember that collaboration is not just a matter of eliminating the negatives, but it is also a process of cultivating the positives. Create a system that allows developers to do what they do best (i.e., manage construction and leasing), while making sure that the municipality exercises its strong points (i.e., planning and providing infrastructure).

Challenge #2. Residents' distrust of using public funds for retail projects. City leaders sometimes face criticism from residents or the media for spending tax-generated income on projects that will make money for private companies. It's much easier to convince people of the worth of a public/private partnership such as a subway system, where a private company operates the subway for profit. After all, many of the residents benefit from the subway either through using it as transportation or by experiencing less traffic on the freeways.

Selling a retail development partnership can be more difficult, because not all residents will shop at the new stores. The municipality has to ensure that residents understand the economic benefits of the project in terms of increased revenue as well as other benefits pertaining to the development such as additional jobs for the community, etc.

Solution: Good communication is the key to overcoming this challenge. To head off this criticism, it's essential for the municipality spearheading the project to make sure residents fully understand the value of the project.

Challenge #3. Frequency of change in public leadership. Because public sector leaders are elected, there is a high turnover rate. That creates a potential problem because the public-decision process and priorities can change in mid-stream.

Solution: To overcome this challenge, cultivate one or more "champions." A champion in this case is a person of authority who understands and promotes the project. Champions, from both the public and private sectors, keep in mind the long-term vision of the project.

To keep the project on track despite turnover in leadership, it's vital to have a detailed plan (possibly created by a third party that is an expert in the field). The plan details the goals and responsibilities of the project. It also defines how the project will be funded and repaid.

Public/private partnerships for retail development can truly be "win-win" opportunities for both sectors. Be aware of the challenges and face them accordingly.