LAMDC would be charged with a number of key functions to support the City’s real estate and economic development goals. These functions would include: 1) the strategic management of the City’s real estate assets; 2) streamlining the reuse, revitalization, and disposition of City-owned properties; and 3) the management of select economic development financing tools. The advantages to contracting out the City’s portfolio management operations to LAMDC are manifold:
1. A clear, central starting point – LAMDC would provide a clear, central starting point for entities seeking to engage with City-owned property, including developers, corporations, small businesses, nonprofit organizations, etcetera. Currently, the City’s asset management functions are fragmented among various City departments (GSD, CAO, EWDD, HCIDLA), obfuscating the process by which stakeholders might engage with City-owned property. This fragmented system inhibits or prevents opportunities to maximize the value of the City’s real estate holdings. LAMDC, on the other hand, would act as the first and readily visible entry-point for a host of stakeholder inquiries, from real estate developers examining a potential public-private partnership to businesses in need of certain financing.
2. Public goals with private sector expertise – The proposed governance structure of the LAMDC Board combines the public interest with private sector expertise. The size and scope of the City’s real estate portfolio is less like that of a traditional municipality and more like that of a largescale private real estate company. As such, the strategic management of the City’s real estate holdings should be entrusted not only to City officials representing the interests of the public as it is presently, but also to individuals whose experience and skillsets are best suited to the management of a real estate asset portfolio of the City’s size. A Board of Directors that includes both City representatives and real estate and finance experts will provide this critical balance, as demonstrated by model organizations such as the New York City Economic Development Corporation (NYCEDC) and the Philadelphia Industrial Development Corporation (PIDC). These models are based on a contractual relationship whereby each City is able to maintain discretion and authority over its assets, while leveraging the private sector to manage them.
3. A proactive approach – The establishment of LAMDC as the chief strategic manager of the City’s real estate assets would allow for a proactive, rather than reactive, approach to portfolio management. As it exists in its current form, City entities equipped with real estate asset management functions rely on an initial Motion from a Councilmember for strategic planning to be set in motion. As an income-producing entity, LAMDC, on the other hand, would be able to independently seek out economic development opportunities on the City’s behalf, leveraging City-owned properties and helping to meet key policy directives of the City.
4. Leveraging the City’s finance tools – LAMDC would be able to leverage the City’s off-budget financing entities such as the Los Angeles Development Fund (LADF) and the Industrial Development Authority (IDA), among others. Not only a singular entry-point for potential real estate developments or partnerships, LAMDC could potentially serve as a conduit financing entity for some of the City’s underutilized economic development financing. As a conduit issuer of tax credits, bonds, and grants, LAMDC could leverage many of the City’s incentives, services, and programs. Any financing would require prior partnership and approval of the City. These include, but are not limited to:
- Industrial Development Bonds;
- EB-5 Immigrant Investor Program;
- New Business and Small Business Tax Exemptions; and
- Section 108 Secured Loan Program.
5. Cross-sector collaboration – An economic development entity such as LAMDC that brings together multiple stakeholders to collectively respond to the City’s needs offers a model for cross-sector collaboration that is vital for the City’s continued development. LAMDC, with the respective City Council District, can work collaboratively with constituents and other stakeholders through robust community outreach efforts for its prospective real estate assets. Furthermore, the contractual relationship between the City and LAMDC affords the City the leverage to assert its policy priorities directly to LAMDC, which functions in effect as a hired, private portfolio manager. Through frequent, comprehensive financial reports, the City can stay abreast of LAMDC’s activities just as LAMDC engages with the City on its ongoing projects.
6. Reinvestment of transaction revenue – In line with NYCEDC, LAMDC would be able to collect revenue from real estate and financing transactions executed for the City. While proceeds from any lease, sale, loan, grant or other transaction would be retained by, and create a steady revenue stream for, the City, LAMDC would be able to reinvest its own income from transactions – typically in the form of a percentage of revenue from the transaction – into opportunities such as business development, financing, investment in infrastructure, and new real estate developments and acquisitions.
7. Proprietary assets and infrastructure – LAMDC would be able to support development projects for the City’s most critical proprietary assets and infrastructure such as LAX and the Port of Los Angeles. Currently, the major proprietary departments such as DWP, LAWA, and the Harbor operate and manage their own discretely-held real estate assets, and given their proprietary ownership, the City’s management entities are limited in their abilities to engage with these strategic real estate assets. Although these proprietary real estate assets must remain under direct management of the corresponding departments, LAMDC could provide support to the revitalization efforts of the proprietary departments.
New York City Economic Development Corporation (NYCEDC)
NYCEDC is a nonprofit corporation that serves as the primary engine for economic development for the City of New York. Overseen by the Deputy Mayor for Housing and Economic Development, NYCEDC is governed by a 27 Member Board of Directors, of whom 16 are appointed by the Mayor directly, 5 are appointed by the Mayor upon nomination by the Borough Presidents, 5 appointed by the Mayor upon nomination by City Council Speaker, and 1 (the Chairperson) appointed directly by the Mayor after consultation with New York City Partnership, Inc. According to NYCEDC, in FY16 alone, NYCEDC carried out 46 land sales totaling $536.1 million, and rent from the 89 leases totaled $126.1 million. Furthermore, NYCEDC’s 554 Financial Assistance Investment Projects as of FY16 have resulted in 5.9% of total private employment in New York City and $36.1 billion in private investment. NYCEDC’s real estate and financing operations make up the following services:
- Facilitating development projects throughout the City spanning commercial, industrial, water front, maritime, market, and aviation properties and rail freight and intermodal transportation;
- Revitalizing and activating underutilized areas for development within the City;
- Providing financial assistance to attract, retain, and expand businesses in the City by issuing loans, grants and subsidies from public and private sources;
- Managing lease and sale opportunities for City properties;
- Streamlining procurement process for development projects; and
- Assisting and completing public improvement projects.
NYCEDC has created a variety of innovative programs and initiatives to support and carry out these essential services. Recent programs include, but are not limited to:
- NYC Ferry – provides a new, affordable travel option between waterfront communities and NYC;
- Food Retail Expansion to Support Health (FRESH) – provides zoning and finance incentives to eligible grocery store operators and developers to establish and expand neighborhood grocery stores in underserved communities;
- Fashion Manufacturing Initiative (FMI) – promotes local fashion manufacturing through grants, programs and collaborations, and a searchable production database; and
- IDA Life Sciences Program (ILSP) – provides Life Sciences companies and developers of Life Sciences space with real estate tax deductions, mortgage recording tax waivers, and sales tax exemptions on purchases of materials for equipment.
Philadelphia Industrial Development Corporation (PIDC)
Founded in 1958 by the City of Philadelphia and the Greater Philadelphia Chamber of Commerce, PIDC is a public-private nonprofit economic development corporation that handles industrial and commercial real estate and financing for the greater region. PIDC is governed by a thirty-member Board of Directors, appointed by the Mayor of Philadelphia and the President of the Greater Philadelphia Chamber of Commerce. According to statistics listed on its website, PIDC facilitated the investment of over $1 billion in capital and over 23 acres of land sales city-wide in 2016 alone. Also in that year PIDC gave out 75 loans to small and growing businesses and created or retained more than 8,000 jobs. To accomplish its economic development goals, PIDC manages the following three organizations:
- Philadelphia Authority for Industrial Development (PAID) – public authority that manages industrial and commercial real estate, issues taxable and tax-exempt bonds on behalf of nonprofits and manufacturers, and provides government grants funding for economic development projects throughout the city;
- PIDC Community Capital – 501(c)(3) nonprofit and certified community development financial institution (CDFI) that focuses on community investment, small business lending, and technical assistance in underserved, low-income communities; and
- PIDC Regional Center – a partnership between PIDC and CanAm Enterprises, LLC to sponsor investor opportunities in projects that qualify for the U.S. Immigrant Investor Program (EB-5 Program).
The Copenhagen (CPH) City and Port Development Corporation
The CPH City and Port Development Corporation was created in 2007 as a merger of Ørestad Development Corporation and the Port of Copenhagen. Co-owned by the City of Copenhagen and the Danish national state, the corporation oversees the ongoing redevelopment of the country’s capital city, established in response to the severe economic conditions in the city during the mid-to-late 1980s when Copenhagen suffered from 17.5 percent unemployment and an annual budgetary shortfall of $750 million. Today, Copenhagen’s reputation as one of the most prosperous cities in the world is in large part due to the efforts of its development corporation. Elucidated in a Brookings Institution report by Bruce Katz and Luise Noring, the CPH City and Port Development Corporation combines publicly-owned properties with private management expertise, following a model now referred to as the “Copenhagen Model” in studies such as those by the Brookings Institution and the recent book The Public Wealth of Cities by Dag Detter and Stefan Fölster.  It can be summarized as follows:
- National and local government transfer public assets to CPH City and Port Development;
- Local government rezones transferred land for residential and commercial uses;
- CPH City and Port Development borrows against increased value of land;
- CPH City and Port Development either transfers new capital to metro construction company or uses new capital to fund infrastructure projects for the development of the land;
- CPH City and Port Development oversees development by selling or leasing to developers and occasionally by developing itself; and
- CPH City and Port Development collects revenue to service debt.
The CPH City and Port Development has managed approximately half of all redevelopment projects in Copenhagen over the last decade, overseeing the transformations of the Ørestad area, the formerly industrial South Harbor area, the North Harbor, and Paper Island. Revenue generated from the corporation’s management of Copenhagen’s public assets has financed the construction of the city’s metro system. CPH City and Port Development was able to make an initial one-time payment of $2 billion to the construction company after borrowing against the harbor. Compiled from financial data available on the corporation’s website, the Brookings Institution states that the corporation has raised $15 billion in capital from the North Harbor alone, $5.8 billion of which has been directed to the metro construction.
 Bruce Katz and Louis Noring, “The Copenhagen City and Port Development Corporation: A Model for Regenerating Cities,” The Brookings Institution (June 2017): https://www.brookings.edu/research/copenhagen-port-development/.
 Dag Detter and Stefan Fölster, The Public Wealth of Cities (Washington, D.C.: Brookings Institution Press, 2016): 1-272.