With retail developers facing difficult financial markets, it is becoming increasing popular to seek public sector participation in sharing the inherent risk of new developments by providing more incentives and financial assistance from communities.

Public sector/private sector partnerships (PPP) and communities’ active participation are not new to retail development.  What has changed is the increased levels communities are asked to commit especially in times of limited resources.  It is a tough challenge but communities are responding by taking a more aggressive role as a participating partner and demanding more say in the development.  Here are ways that communities are exerting their expanded role in the PPP:

Design Standards-The typical square, big box may not be aesthetically pleasing so communities are requiring design standards that better reflect the community’s vision and desires.

Public Facilities-A trend of the mixed-use development is the inclusion of more public facilities.  City halls, public libraries, transit terminals and public safety buildings in retail developments satisfy community and citizens’ needs and make the development more desirable from the community’s perceptive.

Closed Store Requirements- A closed store or center can be a magnet for continued neighborhood decline and lower property values. Many communities now require that if a property “goes dark” the owner must keep the lights on, maintain the parking lots and landscape and not board up windows.

Clawback Provisions-Incentives and financial assistance from communities are increasingly tied to performance agreement with the developer or retailer. Cities are more aggressively monitoring and enforcing these performance agreements.  If the company does not comply or falls short of the agreed performance standards, prepaid incentives may be totally or partially recalled. 

As the private sector seeks more public sector participation the PPP roles are evolving and the public sector is no longer just a witness to retail development but an active and joint participant.

Amy Wetzel will be speaking on PPP during the Retail Trends and Predictions panel at ICSC RECon. The panel takes place Tuesday, May 19 at 9:15 am in the Las Vegas Convention Center Room S230-S232.

View the May 2009 Community Matters Newsletter