Notably, Scribner suggests that the two categories are very different beasts, and that real estate projects should be avoided. Atlantic Yards is one of five examples in that sector.
One has long been dominated by government monopolies and the other has been largely free of political forces. In the case of surface transportation infrastructure, innovative new private-sector financing, management, and ownership regimes have much to offer in terms of minimizing taxpayer exposure to risk, capturing user revenues, and creating an efficient transport network. In contrast, government’s recently expanded role in real estate development has increased taxpayer exposure to risk, socialized costs, and concentrated the benefits into the hands of select private developers and special interests.He recommends that partnerships in the real estate sector be avoided, "[o]utside of limited instances such as the Department of Defense’s Base Realignment and Closure (BRAC) program."
The examples, including AY
The 30-page report cites five examples of dubious real estate deals, including:
- downtown Minneapolis’ Block E
- downtown Pittsburgh's Fifth and Forbes corridor
- New Jersey's Xanadu (recently renamed The Meadowlands) megamall
- Navy Yard development, including a new stadium, in Southeast Washington, DC
Whether the taxpayers will be "on the hook for at least $1.6 billion" is hard to ascertain, but the developer will be saving a bunch. (And that's before Chinese money for green cards, even.)
And Scribner's right in pointing out that property owners in New York face little chance challenging condemnation in court.
Would private sector have gone it alone?
The elements of these five real estate PPPs profiled above vary greatly, but all share some key characteristics: fiscal mismanagement, handouts to business or labor interests (or both), and top-down central planning. The extent of social harm created through public sector subsidies also varies— ranging from New Jersey’s Xanadu project facing imminent collapse to Pittsburgh’s recent shift toward more humble (though still pernicious) planning. But make no mistake: All of these projects have misdirected investment to projects that the private sector, absent public subsidies, would never have developed.Marc Scribner - The Limitations of Public-Private Partnerships