City and County Options for Creative Financing: PFD’s, PDAs and 501 (c) (3)sPreston Gates & Ellis LLPPages 1-14George Laue Due date: October 15, 2013

This paper examines public facilities district, public development authorities, and non-

profit corporations and if they offer potential advantages like more entrepreneurial decision

making, opportunities for private citizen involvement, and alternative contracting methods and

not limited liability for the city or county. Public Development Authorities is used when the city

or county determines the management, development, and operation of a single project is

managed outside of its traditional bureaucracy. An example is Pike Place Market in Seattle

where there’s private retail, nonprofit services, and historic buildings. The city determined that

managing the market would strain public resources and personnel so they offered the PDA to do

the day to day operations and respond to unique needs of the private retail. The PDA can issue

tax-exempt bonds, and for the bonds to be tax-exempt the project must be used for a public

purpose and must be repaid from public funds no private resource, but does not have power of

eminent domain or taxing authority. This works perfectly for Pike Place Market. A disadvantage

is the lack of control the city has over the PDA but I think they could have multiple meetings to

assure the terms are fulfilled. Public Facilities Districts is established by cities or counties

pursuant to build regional facilities such as convention centers. PFDs are authorized to impose a

local sales tax credited against the state sales tax unlike PDAs and nonprofit so, they can

construct, remodel, maintain, and equip certain public projects. For example charges and fees for

the use of facilities. A disadvantage is that they can no longer access nonvoted sales tax, and

again cities have a low level of control but can appoint members of the PFD board. Nonprofit

Corporations are entities that are independent of government and can issue tax-exempt bonds for

projects that will eventually be owned by government. In addition they can offer the opportunity

to shift the risks and costs of construction away from the government. Looking at the alternatives

for the traditional means we can see the different approaches for different situations that work to

helping the city rather than putting it at a disadvantage. Reading the disadvantages it seems that

cities and counties need to find a reliable source and continue having meetings with these

organizations to keep in check that the project is going well.