A successful public-private partnership between developer TPA and Cherokee County’s development authority highlights a growing trend in Georgia’s cities and counties.
Team builders: Developers John K. Watson, left, and Mark Mallard, of TPA Realty Services
Like an American flag planted into the lunar surface, the shiny slab of black granite seems oddly out of place amid the hardwoods and rolling hills in a pristine patch of Canton in Cherokee County. It bears the inscription “The Bluffs,” heralding an ambitious multi-use layout seven years in the works.
To those with traditional leanings in real estate development, the template for how this deal was structured might appear equally unconventional. But the developer TPA Realty Services (known until recently as Technology Park/Atlanta), which birthed The Bluffs venture, is fond of often playing by a different set of rules: collaborating with government, then building on the strengths of both parties as a foundation.
Known as Public-Private Partnerships (PPPs), these are the offspring of cities and counties tapping developers as teammates in hopes of luring well-paying jobs to their backyards.
TPA, widely recognized for its Johns Creek spread along Atlanta’s northern corridor, has embraced this way of doing business.
“The public-private model is an emerging need,” says John K. Watson, principal for real estate development with TPA and former chief of staff for Gov. Sonny Perdue. “It is no longer acceptable for some communities to have a piece of dirt and hope that something will come.”
The process emanates from out-of-the-box strategizing by local economic development authorities, a staple in Georgia. The quasi-government bodies were born of a realization that communities own an arsenal of desirable assets such as land, but lack the expertise or resources to maximize potential.
To attract prospective partners, they can offer to steer companies through the gauntlet of bureaucratic hurdles, from zoning to utilities to tax abatement.
The Bluffs owes its existence to Canton Mayor Cecil Pruett, who pondered in the late ’90s how best to cultivate a 700-acre strip of idle land. He believed it oozed with marketing allure: location (just off I-575) and natural aesthetics (a north Georgia ambiance, featuring a reservoir.)
“We were just a blip on the radar screen then,” Pruett says of the Cherokee county seat. Estimating that 70 percent of residents are employed outside the county, he envisioned a mini-city that would dissuade folks from commuting to jobs beyond its borders.
Pruett’s eye caught a newspaper article lauding Technology Park/Atlanta. “I thought I should talk to them,” he recalls.
Four meetings with the board later, Pruett served as middleman on a pact struck in the summer of 2000 between the company and the Development Authority of Cherokee County, which obtained the land from the old Canton Mills. TPA would buy it, develop it and sell it off piecemeal, complying with a grand multi-use scheme. Both camps would advertise it.
“Ten or 20 years ago [before the advent of partnerships], we’d have had a hard time getting developers to do industrial parks and office parks in Cherokee,” says Misti Martin, the authority’s executive director.
With an injection of $7 million from then-Gov. Roy Barnes’ supplemental budget, a three-mile road that bisects the property was built, replete with roundabouts. Zoning was altered. Utilities were installed. The authority underwrote bonds.
Finally, in February 2006, TPA closed on the property, paying $10 million. It has spent another $5 million in development. The honeymoon hasn’t ended.
Martin: “I can’t think of any way it could have worked out any better for either party. They are an amazing partner.”
Mark Mallard, principal at TPA: “We’re not here today, gone tomorrow. We’ve become one with the community.”
The dawdling pace of development, with just over 100 acres spoken for, is less a reflection of any setbacks resulting from the partnership than of uncontrollable market forces, both sides contend. While there are commitments for residential, warehouse and government uses – as evidenced by the sound of pounding hammers – TPA and the authority counted on coaxing tech-minded tenants onto the grounds by now. No such luck, yet.
“You’ve got to be able to weather the storms,” Mallard says. “We’re pretty encouraged. The phone is ringing. Now, if it wasn’t ringing ... .”
The Bluffs’ undertaking paved the way for TPA’s acquisition of Stanton Springs, a 1,530-acre plot near Covington intended as a self-contained community. With land extending into three counties and affecting a fourth, the firm had to wait on Morgan, Newton, Jasper and Walker counties to whip up a joint economic development team just to execute the complex enterprise.
“That took time,” acknowledges Watson, with marketing recently getting under way.
Tommy Craig, the attorney for Newton County, served as matchmaker after having worked with TPA at The Bluffs. “The toughest hurdle is, you are dealing with so many people,” he says.
The four counties agreed to hold hands after identifying the tract as among the largest undeveloped properties near I-20 within 50 miles of Atlanta. TPA has pledged a minimum of $19 million for land and development costs.
“The project was greeted by leaders of those counties with a great deal of enthusiasm,” Craig says. “There wasn’t any wrangling. Everybody felt this transaction had the makings of a success.”
Taking a cue from The Bluffs, no public money is being devoted to Stanton Springs, Craig says.
Similarly, however, progress in building out the land has assumed the form of a marathon, not the desired sprint. Two out-of-state high-tech outfits wooed by the authority preferred it to others in Georgia but chose instead to relocate in North Carolina.
While TPA voices satisfaction at the rate of development, Craig says, “We are frustrated, on the one hand, on [a lack of] initial success. We are encouraged, on the other hand, that we made it so far in the scrutiny [from the high-techs]. Our day will come.”
TPA’s latest plunge into partnerships is Interstate Centre II, a fertile distribution point 18 miles northwest of Savannah in Bryan County. In this case, the company owned the land, a proposed industrial and business park spilling over 505 acres, and sold it to the county’s development authority while remaining involved as co-master planner.
Now in its nascent stage, Interstate Centre II ultimately will cost TPA about $8 million – a third partnership that keeps the company at the crest of the wave.
“The needs of government are so diverse and the assets that it has at times are more narrow [than businesses],” Watson says. “It can’t be everything to everyone, so what you’re finding is government ... saying, ‘We could use some help to accomplish our collective goals.’”
Reflecting the budding interest, the advocacy group National Council for Public-Private Partnerships in Washington, DC, counts 135 members, about 60 percent private companies, with a roll expanding some 20 percent per year.
Partnerships, according to executive director Richard Norment, are a rapidly growing trend. He cites a realization, over the last five or six years, that partnerships make possible some things a development authority alone couldn’t do. “What you can do is combine the two [parties], then have your cake and eat it, too.”
Field Of Dreams
The partnership paradigm works on various scales. Georgia operates its own authority, reaching overseas to attract businesses such as auto plants in conjunction with local associations.
“We’ve had tremendous success with these partnerships,” says Ken Stewart, commissioner of the state’s Department of Economic Develop-ment. “They provide a ‘field of dreams’ in creating jobs, generally of the technology or industrial type.”
The concept has spawned such radical scenarios as the Department of Transportation’s considering new roads constructed by private companies, then operated by the state.
The public-private partnership in Georgia harkens back at least a quarter-century, with Patillo Construction of Stone Mountain pioneering industrial-oriented partnerships.
“Communities are generally not experts at building industrial buildings, but they have the money to build them,” Patillo CEO Larry Callahan says. “So they go to a professional to do it. ... I’ve never gotten into one where it didn’t work out.”
Still, the bandwagon for companies trolling for partnerships may never become standing-room-only. “It’s not everybody’s cup of tea,” Watson says. “There are those who believe, ‘I don’t want to deal with the government.’ Some of the transactions are slower because of the deliberate processes governments must go through.”
The processes don’t intimidate TPA, partly because its payroll is speckled with government transplants who know the ropes. “We can say [to communities], ‘Look, guys, if it takes you a little longer to make that decision, we’ll be there when you make it.’”
Norment notes, “It’s more complex ... more convoluted and tedious, in some sense. You’ve got a couple of more cooks in the kitchen.”
Another hindrance for some is a requirement to conduct nearly all business in the open, in accordance with sunshine laws. “It’s transparent,” Norment says. “You’ve got, say, the whole city council staring down the throats of your people.”
“Companies have to realize there is more public scrutiny,” says former Indianapolis Mayor Bill Hudnut, senior fellow resident at the Urban Land Institute, an education and research consortium that published 10 principles for a fruitful alliance. “They have to accept that as the price to do business.”
He urges communities to award contracts fairly without showing favoritism, a guideline seconded by Richard Martin, associate professor of real estate at the University of Georgia’s Terry College of Business.
“The biggest downside is the perception of [governments] channeling these things to friends,” he says. “The selection of a developer has to be an open discussion.” Given those conditions, “I think these things are great. It’s probably the most efficient way to get them done ... as governments become more and more strapped for cash.”
Canton Mayor Pruett considers himself a convert. He cites three other partnerships in Canton, none involving TPA, that mimicked The Bluffs’ concept. Inquiring communities are “blown away” by the bull’s-eyes.
“Small cities like ours – although we’re not so small anymore – have not been able to do certain things we’d like, so we’ve had to be creative. We have provided everything we possibly could [to the developer] without going into the city coffers for money.”
Not every venture is partnership-ready, Craig observes. Rather, “It is a tool we need to keep in our economic development bag.”
Especially as increasing numbers of developers warm to the notion.
Watson notes that a handful of hesitant competitors “have wondered why we’d even want to partner with government.” Which suits him fine.
“If it’s someplace where others don’t want to go,” he says, “it’s good for our business.”