When we think of government, we don’t often think of all the assets owned by government. And we even less frequently consider about how those assets could be leveraged to benefit taxpayers.
Utah’s many public entities — the state, cities, counties, school districts, transportation agencies, special districts, etc. — own billions of dollars in assets. And some of those assets could undoubtedly be better used for the public good.
That’s the concept behind a new initiative championed by Salt Lake County Mayor Ben McAdams to inventory, categorize and value public assets in the county, and eventually put some of that value to use generating revenue for needed services or infrastructure — saving taxpayer dollars.
The worldwide evangelist for maximizing the value of public assets is Dag Detter, a senior adviser with The Boston Consulting Group, and a former director at Sweden’s Ministry of Industry. He is co-author of "The Public Wealth of Cities: How to Unlock Hidden Assets to Boost Growth and Prosperity" and frequently writes and speaks on the topic.
Detter recently wrote, “Every city (and other government entities) is sitting on a gold mine, with commercial assets worth the equivalent of at least each city’s own GDP. Publicly owned real estate alone normally represents about a quarter of the total real estate market in a city.”
Smartly managing these assets could generate a return that could be invested in infrastructure, public housing or other government services — reducing taxpayer burden.
Shaleane Gee, director of Mayor McAdams’ initiatives and special projects, is coordinating the effort for the mayor. “Governments know what they owe, but they usually don’t know what they own,” says a county presentation. “Cities and counties own immense assets that can help finance the future.”
Salt Lake County is taking five steps to leverage public assets.
First, using Urban3, a highly specialized consultant, assets are being listed, mapped, inventoried, valued and segmented according to commercial potential and feasibility. Not all public assets, obviously, have commercial value. But some clearly do.
Second, the county, likely partnering with other governments, will create a Public Asset Corporation (such entities are sometimes called an Urban Wealth Fund). A governance structure will be created with a board, auditors and professional asset managers, with participating governments as shareholders.
Third, high-potential and politically feasible assets will be transferred into the Public Asset Corporation with the expectation values will be maximized in commercial endeavors and/or public/private partnerships, with returns flowing back into government budgets. A comprehensive business plan will be developed for the entire portfolio, putting each asset to its most productive use.
Fourth, the entire effort will drive economic development with a long-term economic growth strategy and positive outcomes for taxpayers and society. Yields will be dedicated to needed infrastructure and services.
Fifth, an important commitment is that critical open land, parks, watersheds, green spaces, trails, etc., would be preserved, protected and maintained for the enjoyment of the public and to protect the environment. There is no intent to sell off public land.
Initial data show publicly owned real estate, alone, in Salt Lake County has a value of nearly $9 billion, and that is very conservative. Smart development could generate profits returned to the benefit of taxpayers and their governments.
For example, Gee noted that an unused jail property in Boston was sold in 1991 for $16 million. The new owner renovated it into a commercial property now worth more than $170 million. It contributes more than $3 million a year in property taxes alone, and provides jobs and economic vitality. Had the city kept it and developed it, the value to the city would have been dramatically more than the mere $16 million received in the sale.
It’s possible that some small, oddly shaped, properties in Salt Lake County could be developed into affordable housing under the direction of the PAC’s expert property managers.
The county is committed to complete transparency throughout this process, with maximum public input, open records and full discussion.
I believe many excellent opportunities will be discovered during this process, and I encourage Salt Lake County to move forward. This initiative can be a major long-term economic benefit to taxpayers.