By DENNIS QUICK
Senior Staff Writer

Noisette president and CEO John Knott admitted that his company, which has partnered with North Charleston to redevelop some 3,000 acres of the city, including 350 acres of the former Navy base, should have told the city about the $3 million in loans Noisette took out to renovate two Navy base buildings.

The loan controversy arose after the city got wind of the loans and requested Noisette to pay North Charleston 35% of the total loan amount as it says is required in their contract. Noisette disagrees and lawyers on both sides are arbitrating.

During a March 24 press conference, North Charleston Mayor Keith Summey sat beside Knott and joined him in assuring that the 20-year project, billed as one of the largest urban redevelopment initiatives in the nation’s history, remains on course.

“Whether our contract required us to inform the city of these loans is something that our lawyers are working through,” Knott said. “But I do agree that I should have kept the mayor and council better informed of our efforts. I take full responsibility for that, and I’ll work harder to improve our communication.”

In a public-private partnership, which is the arrangement North Charleston and Noisette have for the Noisette redevelopment project, transparency is essential, says Richard Norment, executive director of the Washington, D.C.-based National Council for Public-Private Partnerships. The council advocates and facilitates public-private partnerships across the nation.

“If the partnership is going to succeed, open and candid communication between partners is critical,” Norment emphasizes.

Public-private partnerships have become a popular strategy for urban redevelopment projects because most cities in the United States are too financially strapped to undertake such projects alone, Norment explains.

“The city may own a big chunk of land but doesn’t have the money or the expertise to develop it,” Norment says.

That’s when cities team up with private companies. Usually, private companies finance and execute the project while cities control the project to make sure its scope doesn’t exceed or fall short of the development plan. But private companies only participate in a partnership if they stand to gain a profit, Norment says.

Keys to successful public-private partnerships include political leadership, active involvement from the public sector, a well-conceived plan defining the expectations of the partnership, communication among the stakeholders and selection of the right partner for the project, according to the National Council for Public-Private Partnerships’ Web site.

Public-private partnerships, Norment says, can be used to save single facilities in addition to entire urban neighborhoods. As an example of saving a single facility, he points to the James F. Oyster elementary school project in Washington, D.C.

In 1995, the school was overcrowded and deteriorating. The school district, the city and LCOR Inc., a national real estate company specializing in public-private development, formed a public-private partnership to save it. The project involved creating an educational and residential complex combining a modern school with an apartment building on school property. To finance the project, the district issued a 35-year bond package to be repaid entirely with revenue generated by the private apartment building. What resulted in 2001 was a new $11 million school at no cost to District of Columbia taxpayers.

In Atlanta, constant contact among all partners in the Atlanta Downtown Improvement District’s several public-private partnerships has prevented serious disagreements, says Richard Orr, spokesman for Central Atlanta Progress Inc., a private, nonprofit corporation and the ADID’s parent company. As CAP’s public-private partnership arm, the ADID is involved in projects ranging from public safety to economic development.

“We keep constant contact among the mayor’s office, corporate COOs, the city planning department, the parks and recreation department and others involved in public-private partnerships,” Orr points out.

The mammoth Noisette project involves the Noisette Co. financing Navy base redevelopment through property sales and through tax increment financing, in which future tax increases in designated TIF districts are placed in a special fund for infrastructure improvements.

In 2003, North Charleston sold about 350 acres of Navy base property to Noisette for $9.6 million. So far, Noisette has received only 178 acres. The U.S. Navy must release the remaining 172 acres to the Charleston Naval Complex Redevelopment Authority, which will then transfer the land to North Charleston. The city will then deed the land to Noisette.

If Noisette sells any of the property or uses property as collateral for another loan, the company must pay the city up to 35% of the sales price or loan principal, according to the company’s contract with the city.

In acknowledging Noisette’s communication failure with North Charleston, Knott points out the complexity of the Noisette project. 

“There are no blueprints for the unique public-private partnership we’ve developed between the city and the Noisette Co.,” Knott claims. “We’re breaking new ground here, and our success depends on trust.”

Dennis Quick covers economic development for the Business Journal. E-mail him at dquick@crbj.com.  

SUBSCRIBE | REPRINTS | CONTACT US

Phone: 843-849-3100    Fax: 843-849-3122