Mayor Pro Tem Les Gerhardt, left, talks with real estate developer and former Sugar Land mayor David Wallace before Wallace’s recent presentation about partnerships between public entities and private businesses. PHOTO BY DAVID LOWE Public-private partnerships can revitalize a city and increase its tax revenues, a developer told a group of elected officials, civic organization representatives and business leaders in a meeting Thursday.

Responding to Mayor Judy Hetherly’s invitation, David Wallace, chief executive officer of Houston-based real estate development firm Wallace Bajjali Development Partners, discussed the various methods, funding strategies and potential benefits of partnerships between public and private entities.

Public-private partnerships can take several forms, Wallace said, including leases of city- or county-owned land and property tax abatements granted in an effort to increase retail activity and sales tax revenues.

In Lampasas County, Wallace said one of the best funding sources for business recruitment and public-private ventures is the Lampasas Economic Development Corp., a 404(b) corporation that receives one-sixth of the city’s sales tax receipts.

Other funding sources include federal incentives available through stimulus funds, the Troubled Asset Relief Program and NAFTA Impact Zones, Wallace said.

As mayor of Sugar Land from 2002 to 2008, Wallace helped coordinate several public-private partnerships, including a mixeduse project that featured a 60,000- square-foot convention center, a new city hall and a 300-room, four-star Marriott hotel that has achieved an average occupancy of 90 percent since its opening.

Noting concert series, movie screening and other cultural gatherings in the 32-acre downtown development, Wallace said partnerships that involve publicly owned and operated space give residents places to gather.

“It creates a quality of life benefit and a place where people can gather,” Wallace said.

Along with promoting cultural and civic activities, public-private partnerships can help rejuvenate a town and generate additional revenue, Wallace said.

The developer mentioned, for example, the Waco Town Square project on which he has worked for Wallace Bajjali. The $150 million project includes a new chamber of commerce building; student residences; residential lofts above offices, commercial buildings and retail establishments; and Heritage Square, a soon-to-be refurbished park-like area.

As its main incentive for private development of what had been a blighted downtown area, the city of Waco offered 80-year ground leases of city-owned land. The formerly untaxed property the city had been maintaining now generates about $2 million a year in ad valorem taxes, Wallace said.

Public-private partnerships, he said, enable partners to obtain financing for projects more easily than they would if they worked alone. In addition, splitting infrastructure costs between public and private entities can allow partners to work more efficiently, Wallace said.

“A public-private partnership does not make a bad deal good,” he said, “but many times what it does is make it [a good project] quicker, faster and of higher quality.”

Partnerships also can increase rates of return on investments, Wallace said.

Wallace added, however, that public-private partnerships sometimes face opposition because of incentives given to private developers. Some people consider such incentives “corporate welfare” for large or politically well-connected businesses, he said.

Once people learn that a partnership likely will attract new businesses, generate tax revenue and result in recreational facilities or other gathering places, however, public-private ventures tend to gain popular approval, Wallace said. The former mayor noted that in Sugar Land’s bond elections, the public-private partnerships begun during his tenure all passed with at least 70 percent voter approval.

During a question-and-answer session after Wallace’s presentation, several real estate brokers asked how public-private partnerships can work in small towns. Often, finding available land large enough to attract large retailers can be difficult, they said.

With creative incentives and appropriate guidance from a volunteer committee, Wallace said public-private partnerships can be adapted to suit the needs of small cities and counties.

“You can do a lot with $100,000,” he said, referring to a small economic development corporation’s budget.

After the presentation, Lampasas City Manager Michael Stoldt and Ms. Hetherly said they hoped the developer’s information will make Lampasans and other county residents consider how public-private partnerships can benefit the area.

“I think there was a lot of good information,” Stoldt said. “Sometimes the city just needs to be more aggressive to close the deal.”

Noting the partnership between public entities and the Lampasas County Higher Education Center’s private foundation, Ms. Hetherly said cooperative efforts can help Lampasas promote positive change. “It’s a matter of how you want our city to grow,” the mayor said. “What do you want it to look like?”