This article covers the ativities of two South Florida Community Redevelopment Agencies (CRAs) to use PPP to alleviate slums and blight and provide affordable housing. CRAs are special governmental districts that operate using tax increment financing (TIF) to fund programs and projects outlined in a redevelopment plan prepared with Community input. TIF is the increment increase in property tax reveue in the CRA district since it was established, and these funds are deposited into a trust fund for the CRAs use.

 
The area just north of the City of Miami’s business district also has a Community Redevelopment Agency (CRA), the OMNI CRA, to focus on the alleviation of slums and blight and the provision of affordable housing. It is also the historic home of many African Americans. This area of Miami appears perfectly safe now, but it was not always like this. It used to be a high-crime part of the city where most people avoided even traveling through the area.

Affordable Housing Saved and Renovated Through P3

The OMNI CRA has focused on many programs to alleviate slums and blight, and many substantial catalytic projects upgraded the area—a performing arts center, a downtown park, substantial infrastructure and streetscape projects. However, recent efforts have focused on preserving and upgrading the existing affordable housing available within the CRA as well as incentivizing new construction to provide some affordable units—a program planned for and implemented by P3.

An increasing number of elderly and low-income earners now live and will live in new affordable high-rise apartments and in completely renovated existing affordable housing units.

Affordable high rise apartment

How Did They Achieve This?

When the CRA provides land it owns to private developers for housing, the developers can get a 25% “density bonus” under Maimi land use regulations, which allows them to build additional units, units that will be restricted affordable units for lower income earners, and the apartments are the same as those leased at market rate rentals. This affordability restriction lasts for 30 years.

Usually ia private developer cannot build affordable units in the middle of Miami as the rents will not cover the land and construction costs. However, with the CRA partnering with the developers by providing free or low cost land, and the City regulations providing a density bonus for providing affordable units, this P3 provides affordable apartments in the middle of the City.

For decades, the United States approach to providing affordable housing was to build large high-rise apartment complexes. The Federal government no longer provides financing for such projects, instead providing a voucher system for direct subsidy to qualifying landlords. But this system does not provide enough people with such vouchers, and state and local government must innovate in order to meet local needs. The OMNI CRA P3 is one of these innovative approaches designed to meet the needs of low income earners with the joint efforts of the public and private sectors. In Japan, the primary method to provide affordable housing is still the large scale production of apartment complexes for the elderly and low income earners.

But the United States realized that this method of concentrating the poor works counter to the goals and objectives of redevelopment, and in fact may actually encourage blighted areas. The P3 approach of cooperation of the developers and local government through the use of inventives has provided a viable option to both house the elderly and low income earners as well as increase local government revenue through the increase property value and therefore in property tax income. The OMNI CRA, as the receiver of the incremental increase in property tax revenue, partially recoups the cost of the P3 land and related investment incentives.

OMNI Spurs the Movie and Television Industry, Provides a Park for Museums

The State of Florida reduced financial incentives to the movie and television industry, and through P3 the Omni has leveraged land that it owned to incentivize the construction of production studios and offices, and to require amoung the community benefits the creation of new jobs. Now completed, the film studios have created over 200 new jobs, and the shooting on location I Miami and the editing and distribution of movies and television material has resulted in more than $ 1 billion in new spending in the area.

The CRA, the City, the County and the private sector partnered to clean up former port facilities into a downtown park, allowing the construction of an art museum and a science museum. The P3 to get this done has resulted in almost 500 new jobs.

Perez Art Museum

Why P3s Are Spreading

Jason Walker

Director of OMNI CRA

“Everybody has to understand the PPP benefit all parties,” says Jason Walker, the Executive Director of Omni CRA. “P3s are our mission. It’s what we’re supposed to do.”

As Isiaa Jones, the Chief Legal Officer, explains, “As a government agency,we are typically understaffed. Partnering with a private company results in a project that is easier to manage, better, and more reliable. The private partner can afford to do some of the things that we can’t, and we can fill the gaps.”

Isiaa Jones

Chief Legal Officer

A major challenge with the use of P3s is that government staff often get transferred or leave for a different job. This becomes a risk for private partners t that want to establish a relation of trust and consistent interpretation of the partnership agreement. “That is why the P3 document is critically important,” states Ms.Jones. “The agreement must be clear and the responsibilities of the parties understood by anyone who reads the document.”

“If I were to leave the Omni CRA,” Walker stated, “our individual P3 agreements outline the roles and responsibilities of the parties, and my successor can carry on without disagreement over what commitments were made by the P3 parties.”

P3s are far more common in theUnited States.than in Japan. Redevelopment expert Frank Schnidman, who has been a consultant to the OMNI CRA says, “The goals and objectives of a P3 must be designed with substantial community engagement and participation, and the partnership agreement must be clear and concise about the roles and responsibilities of the P3 partners. Public trust of private business in the U.S. is not as high as in Japan. And public trust of the government may be even lower. The P3 agreement is therefore the critical document, the ‘road map’ that will guide the parties to the desired destination.”

In the United States P3s have been possible because of the need to seek private sector capital and expertise in a time of decreasing government resources. Considering Japan’s current financial situation, it is clear that Japan should explore the experience gained in the United States P3 efforts. After all, P3 is another tool that local government can use to fulfill their mission to provide better services to their residents to improve the quality of daily life. As OMNI CRA Executive Director Jason Walker stated, “P3 benefits all parties.”