City Hall joins with private developers to build urban malls

Boston's Faneuil Hall Market, Baltimore's Harborplace, Milwaukee's Grand Avenue, Seattle's Pike Place - nearly every major American city now has one of these mammoth honeycombs of concrete, steel, and architectural charm known as the downtown shopping mall.

The key to the proliferation of these multimillion-dollar complexes, some of which attract a million people a month (as many as Disneyland), is the teaming up of city governments with private developers - a concept that is gaining widespread acceptance.

''Cities have discovered that the public sector can have a large effect by taking a creative, entrepreneurial role,'' says Scott Ditch of the Rouse Company , a private real estate developer.

Such developments are not without their critics, ranging from low-income residents, who might be displaced, to area merchants, who can find it difficult to compete with the new commercial enterprises.

Nonetheless, city-developer partnerships are proving increasingly popular. The reason, says Bernard Frieden, a professor of city planning at the Massachusetts Institute of Technology, is that they allow inner-city renewal in ''much less time than it used to take, with much less risk of failure.''

Most partnerships are tailor-made. The city may invest public money and share in the developer's profits, upgrading public transportation, providing parking, police protection, street cleaning and lighting - things that play a decisive role in the success of a new retail mall or office building.

In common with all projects is shared decisionmaking between city and developer, from the planning stages through construction, right up until opening day. Cities find this gives them a far greater say in what will be built - and how - than they could have through building and zoning regulations alone.

Gerald Trimble, former executive vice-president of the Centre City Development Corporation in Pasadena, Calif., sees partnerships as a way to bridge the gap between the needs of the city, which he represents, the concerns of the neighborhoods, and the interests of the developer. Barbara Bonnell of Baltimore's Inner Harbor Management (the city's development agency), says it's the city's job to set the stage for development with public funding and a long range plan so that the city ''can negotiate with a developer from a position of equality.''

''Partnership gives cities the opportunity to shape their downtown,'' says Prof. Frieden, ''but also tempts them to worry about financial concerns more than other considerations (such as planning and design, and the social and traffic impact of the project).''

For the developer, a partnership with a city can be a risky business, fraught with unknowns over which the developer has little control. Changes in tax laws and shifts in the political or economic climate can prevent one or both partners from fulfilling their part in the deal. Private developer Daniel Rose is concerned that in many cities interest groups can delay or stop developments through costly litigation.

How to avoid the pitfalls and steer partnerships toward success is one of many questions under study at MIT's new Center for Real Estate Development. ''We're faced now with a host of really complicated issues that affect all communities,'' says the center's director, Charles H. Spaulding.

Looking to the future, both developers and city officials feel the public-private partnership is a resource they have only begun to mine. Some are already looking around to see how they can team up to solve some of the tough questions cities face, particularly the need for moderate-income housing in the inner city.

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