This could be huge, putting local government in a more active role in the private development landscape.
Over the next 10 months, a new incubator program called Putting Assets to Work is helping six municipalities develop the capacity to envision how they can turn publicly owned land and other assets into income-producing, community-building projects. Harris County is by far the largest of the cohort—others include the cities of Atlanta, Chattanooga and Cleveland—with perhaps the largest potential wealth to work with.
The county is sitting on a vast collection of public land and buildings—from roadway rights-of-way to administrative office towers—in varying states of use. The county estimates it has some 350 parcels of land classified as an office or building or as vacant, in addition to over 14,000 parcels designated for right-of-way, parks, and flood control. Obviously, not every parcel is a viable development opportunity, nor should it—detention ponds need to remain detention ponds, and parks need to remain parks. (And we could use more of both.) But the potential is compelling.
According to its own annual financial reports, the county’s land holdings are valued at $4.5 billion and its buildings are valued at $2 billion—but that figure does not account for their potential as revenue-generating commercial assets. (This also includes the Astrodome—an underutilized asset if there ever was one.) The county is also home to perhaps billions more dollars in properties owned by the city of Houston and the other cities within Harris County. The incubator program will also capture data on these properties, which each municipality could use to develop their own public wealth initiatives.
For example, in a 2018 report by Citigroup, public wealth experts Dag Detter and Stefan Fölster—whose book "The Public Wealth of Cities" has inspired this whole approach—estimated that the city of Boston’s $1.4 billion in real estate holdings might be worth, conservatively speaking, closer to $55 billion as commercial assets.
“Assuming, again very cautiously,” they wrote, “that the city could earn a 3 percent yield on its commercial assets with more professional and politically independent management of these assets, on a portfolio worth $55 billion, almost $1.7 billion of income could be generated a year. That is almost four times more than Boston’s current capital plan of about $400 million.”
As the saying goes, pretty soon you are talking about real money.
Officials expect this process to yield some low-hanging fruit—think land and facility leases—but it will also call attention to areas where the county can play a leading role in delivering big redevelopment projects.
“While it does offer a potential for new revenue streams, the more exciting aspect of this for me is the placemaking opportunity—how we can leverage what we own to create other community benefits and help neighborhoods,” said Diana Ramirez, executive director of the county’s Department of Economic Equity & Opportunity. “With the right information, we could really plan something transformational.”
When it comes to real estate and economic development, local government is often at the mercy of developers with the resources and expertise to amass parcels of land, secure financing and design transformative projects. There might be tax incentives or infrastructure investment from the public side, but particularly when zoning is not on the table, public officials are often unable to make demands to further planning goals or secure community benefits. But a public wealth approach could change that dynamic.
“This is a really great opportunity to expand our approach to public-private partnerships with a much bigger role for the county. … It just makes a lot of sense,” Ramirez said.
One way it could have a huge impact is in housing development. The county needs on the order of 250,000 more housing units to meet the needs of those earning below 50% of the median family income, according to estimates by the Kinder Institute for the My Home is Here study. Rather than wait for a free market response to that need, the county could lead the way, using its position as the land owner to spur public-private partnership projects in targeted areas.
Another interesting potential impact is on transit-oriented development to align with Metro’s long-range plans for high-frequency and high-capacity transit. Salt Lake City, one of the few cities that has done a public wealth assessment and that is working on implementation plans, identified development opportunities along its light-rail corridor that could house up to 58,000 people and create 39,000 jobs, according to a Government Finance Officers Association report.
Harris County’s opportunities will become more evident thanks to one of the central products of the 10-month incubator program—a detailed map that highlights what assets and areas of the county have the highest potential value. That process will be led by partner Urban3, which specializes in geospatial and financial analysis for cities.
“The map is what we’re really excited to see,” said Judit Haracsek, Harris County’s director of economic development. “This will help us lead very good discussions with the rest of the county, the commissioners and developers about what’s possible.”
With a map and asset inventory in hand, the second part of the incubator program focuses on helping the county think through the governance framework it would need to effectively implement and manage a program—such as a redevelopment authority or some other body. The Government Finance Officers Association report advises that governments create a Public Wealth Fund through a kind of publicly owned holding company, staffed with professionals with financial and commercial development expertise. Ideally this corporation would kept at arm’s length from the political process while still ensuring public accountability.
That might sound good and reasonable, but it’s never really been done in the US. To see good case studies, you’ll have to look to Sweden or Singapore. But if developer-friendly Houston and Harris County can make this a real community-benefit-driven initiative, it is worth a shot.