Open For Business: At ICSC, Municipalities Nationwide Pitch Developers For P3 Projects

LAS VEGAS — Wearing a red polo shirt with two colorful interlocking C’s and sporting a pair of white Converse shoes, Kate Silvas walks with a type of anxious excitement as she hurries across the Las Vegas Convention Center to her morning appointment with a retail developer.

Silvas, the executive director of the Economic Development Corp. for the city of Converse, Texas, and Converse City Manager LeAnn Piatt, have come to the annual International Council of Shopping Centers' RECon convention armed with a backpack full of pamphlets and USB drives.

Very much like their city name, Converse, they are ready to talk about the growth potential of this small suburb just a 20-minute drive northeast of downtown San Antonio.

“We are growing,” Silvas said. “We are undergoing an aggressive annexation with San Antonio in the next 10 to 15 years and we are expecting to quadruple in population size to 100,000.”

“With all these people that we are expecting to live here, we need businesses and services to come,” Piatt said.

Deep in the Las Vegas convention halls among suit-wearing brokers and C-suite executives, landowners, CRE professionals and developers, are city officials — many wearing shirts with their respective city’s logo — trying to secure deals of their own.

Economic development is an integral part of every city or town. More retailers and businesses in town create economic opportunities, promote job growth in the community and generate sales tax, which in turn maintains or lowers residents’ property tax rate. 

The sales tax money usually goes to the city’s general fund and gets spent on vital city services, such as hiring more police officers, firefighters and road repair.

More than 100 representatives from cities, towns, economic development councils and local business chambers nationwide came to ICSC RECon to promote their cities. 

Many have come pitching vacant industrial land, redevelopment of abandoned property or offering incentives to retailers, developers and others to come in and create business growth.

It seems to be an ideal marriage. Cities are looking for businesses to generate community growth and sales or bed tax. Corporations, retail and hospitality businesses are looking for a home where they can profit and prosper.

But it is not as easy as 1 + 1 = 2, Manhattan Beach-based Kosmont Cos. Executive Vice President Ken K. Hira said.

“It’s more like 1 + 1 = 1.5,” he said. Hira, who is also ICSC Western Division P3 private chairman, spoke Monday at ICSC’s panel Economic Development: Changing Faces, Changing Spaces.

Cities and businesses face a slew of hurdles before they can come together in a public-private partnership, or P3, he told Bisnow.

Hira said several questions have to be answered before the marriage can work: 

• Who is responsible for building the infrastructure of a project?
• How will the city and developers engage all residents and not just the vocal minority who attend the council meetings and may oppose such a project? 
• What, if any, kind of incentives can the city offer to developers?

The last question might be the biggest hurdle to overcome, Hira said. 

Many developers and city officials still have yet to fully process what the tax implications are of President Donald Trump’s recently passed Tax Cuts and Jobs Act, he said.

A previous tax code provision had allowed corporations to not get taxed when they received incentives such as land or other types of incentives from state and local governments or certain groups. Its repeal has Hira worried.

“The new tax law says incentives — land grants, grants and other incentives — are now going to be taxable,” Hira said. “Cities are going to need to be creative to come up with incentives possibly creating a special district, TIF [tax increment financing] or land leases to bring in businesses.”

Still, cities see value meeting with retail brands, developers and other reps at ICSC RECon.

New Orleans Business Alliance Vice President of Small Business Ecosystem Development Lynnette White-Colin said meetings at ICSC in Las Vegas in previous years led denim brand True Religion and makeup company MAC to open stores in the city. True Religion opened a storefront in 2016. MAC opened a store last year.

“We always need more retail,” White-Colin said. “We were under-retailed before [Hurricane] Katrina in 2005 and over the years we made an emphasis to address the issue and attract national retailers to set up shop here.”

New retailers and other businesses help bring in jobs, retain the community’s talent and help the city build its own brand, she said.

Kenosha, Wisconsin, City Council President Anthony Kennedy said he came to ICSC for the first time to meet with companies that might be interested in redeveloping some failed retail centers in his district and possibly undertake the massive redevelopment of a 100-plus-acre site that was once home to the Chrysler Engine Plant. The plant closed in 2010. 

“We have a story to tell,” said Kennedy as he listed companies that have recently come to the city. “If these developers and brands here aren’t in Kenosha, I want to know why.” 

North Chicago City Councilman Bobby Allen said he came to lure businesses and promote the city, which is home to two major pharmaceutical companies and a Naval station.

“We have 32,000 people in North Chicago and we don’t even have one grocery store,” Allen said. “I’m here to get some answers on how to get development and businesses in my community.” 

Allen added North Chicago owns a 40-acre piece of vacant land that was once a former industrial site looking to be redeveloped.

“We’ve cleaned it up. We’re ready for redevelopment,” Allen said. “That’s why I’m here.”

Silvas, the executive director of the city of Converse Economic Development Corp., is bullish on the potential of her Texas suburb.

There are 1,700 homes under construction in the city, she said. Converse is sandwiched between downtown San Antonio and Randolph Air Force Base.

In March, the Converse City Council approved plans to annex land in the city of San Antonio. In the coming decade, the city’s size will grow from 7.1 square miles to 22 square miles, Silvas said.

In the course of two days at ICSC RECon, she and Piatt met with representatives from at least 24 developers, hotels and restaurants.

Many of those officials were intrigued, she said. But they wanted more assurances.

“We have some work to do on our end,” Silvas said. “We need to grow our daytime population to make sure our retailers are attracting visitors.”

Silvas said one way to boost daytime population could be to bring in a hospital or a medical center to anchor the area.

The growing city has lots of options, she said.  

“We are very excited,” she said. “Converse has a lot to offer. We are a hotbed of opportunity.”