Land Use and Government Trends for 2018

As 2018 begins, the following three land use and local government trends are likely to be prominent.

Public-Private Transactions

Public-private deals by local governments grew in popularity in 2017. In a public-private transaction, a local government enters into an agreement with a private entity, whereby the private entity agrees to build one or more public facilities, such as a parking garage or new city hall, in exchange for profitable private property rights relating to the underlying public land.

Take, for example, a city that wants to build a public parking garage. As opposed to the city functioning as a developer and hiring third parties to design and build an expensive facility with public funds, in a public-private deal, the city, as landlord, may enter into a contract with a developer, as tenant, for a ground lease on the project's underlying land. At the outset of such a project, the local government typically selects a developer through a request for proposals or other competitive bidding process. Once selected, the private entity designs and builds the new parking garage at its expense, pursuant to a development agreement with the local government. Often, such projects include retail or office uses as additional revenue streams. In these cases, the developer recovers its costs and receives a return on its investment from such uses, while the city receives ground rent and a percentage of revenues.

Assuming public-private transactions are negotiated and documented in a reasonable manner, such deals can provide strong benefits to local governments and profitable business ventures for private companies. While navigating the intricacies of a public-private transaction can prove challenging for the inexperienced participant, this delegation to the private sector encourages a more efficient, higher-end, and cost-effective method of building major facilities for local governments.

Parking Requirement Reductions

​In 2017, local government officials often indicated their support for decreasing the amount of parking spaces required under applicable zoning codes. Take, for example, the city of Miami's recent approval of 275-square-foot residential micro-units, and corresponding consideration of reduced parking space requirements for such buildings. Underlying these decisions is the Miami 21 “Transit Oriented Development concept,” which allows projects built within one of the city's several TOD areas to reduce their requisite parking by upwards of 30 percent.