Are Local Governments Leaving Billions on the Table?

Serving as mayor of Salt Lake County from 2013 to 2019, Ben McAdams faced a familiar dilemma. He knew what residents needed and felt duty-bound to provide it. But the funds he had weren’t equal to his ambition.

“I was always surprised at how hard it was to find revenue to invest in things that were empirically substantiated to be important to our community,” says McAdams. “One of my passions was early childhood education — we had budget of $1.3 billion a year, yet we couldn't find $500,000 to invest in an early childhood education program.”

McAdams discovered a way forward after meeting Swedish investment adviser Dag Detter and reading his book, The Public Wealth of Cities. It has been the norm for governments to greatly undervalue public assets, Detter says; moreover, unlike the private sector, they fail to manage them in ways that unlock their potential to serve the public good.

As a first test of these concepts, McAdams commissioned an inventory of government-owned real estate in Salt Lake County. The county then projected the value of these assets if they were used in the same ways as privately owned properties within 500 feet of government real estate.

The comparison yielded a “conservative” estimate that the value of the county’s holdings was $45 billion, a figure almost 45 times the county’s annual budget. “Whether that’s the exact number or not, there’s real value there,” McAdams says. “If you put a third of those assets into a mechanism yielding a three percent return, you’d have a new revenue source of roughly $450 million a year, more than we were generating from property tax.” (This isn't theoretical — a single long-term lease of a city-owned parcel that was achieved based on the work McAdams began is bringing in $500,000 a year.)

Public wealth is twice GDP, Detter says, and he advocates placing public assets in “Urban Wealth Funds” (UWF) managed by entities that are transparent and independent of government influence, charged with maximizing their value. Though no U.S. city has yet established a UWF, they have had significant impact in cities in Europe and Asia.

McAdams left his job in Salt Lake County in 2019 to serve in the U.S. House of Representatives. Now he’s back in Utah as a senior fellow at the University of Utah’s Sorenson Impact Center. From this position, he is leading an effort to help local governments throughout the country inventory and leverage underutilized public assets.

In June, the Sorenson Center announced that six jurisdictions had been selected as the inaugural cohort for a Putting Assets to Work (PAW) Incubator. The PAW is a collaboration between the center, the Government Finance Officers Association (GFOA) and geoanalytics firm Urban3.

It is an outgrowth of GFOA’s Rethinking Revenue project, a research-based effort to highlight innovations that can help local governments build revenue systems that remain in sync with changing economic, political and demographic realities.

One goal for the incubator is to build interest in UWFs, says Shayne Kavanagh, senior research manager for GFOA, and move them from “boutique” or “outlier” status into the mainstream of discussions about revenue. “Since they are new, we want to discover the hardest parts of them, what the solutions to those parts are, and to discover areas of risk and de-risk,” he says.

The incubator process begins with an inventory of assets owned by each of the participating jurisdictions. These are being done by Urban3, which helped McAdams in Salt Lake County and has worked with Detter for a number of years.

Cate Ryba, chief operating officer for Urban3, is trained as an urban planner and has worked in city government, including six years on the city council in Spartanburg, S.C. She has first-hand knowledge of the fact that many governments are short-staffed, and every day public service comes first. “Taking time to catalog assets and strategically think about them in service of creating ongoing revenue streams for the communities, is deep and big work,” she says.

Urban3 sorts through public records to compile inventories of properties, assesses their value based on metrics that reflect their potential to be developed, and uses GIS tools to create maps and visualizations that represent their findings.

“The most exciting thing about this work is that cities, towns and counties that are struggling financially have a gold mine at their fingertips that could help them achieve their public policy goals,” Ryba says. “We take data that shows this and turn it into a digestible story.”

Atlanta, Ga., is one of the six jurisdictions chosen to participate in the incubator. It had already completed an assessment of its assets before it was selected, says Joshua Humphries, director of the city’s Office of Housing and Community Development.

“We've got a growing affordable housing crisis here and are looking at every possible tool that we could leverage to build more affordable housing,” says Humphries.

The city lost residents in the decades between 1970 and 2010 due to white flight and suburbanization. Land owned by the city or other public agencies was thought of as a nuisance or aggravation.

By the 2020 census, Atlanta’s population was greater than in 1970; it’s now the highest in the city’s history and continuing to trend upward. “We’re having to look at things differently and turn over stones that we never even thought about turning over before to solve the existential problem we’re facing,” Humphries says.

Drawing on its improved understanding of the location of underutilized assets and their value, the city is focused on developing affordable housing on surface parking lots and vacant lands near transit stations. It acquired a downtown office tower on top of the main heavy railway hub station that it is working to develop into residential housing.

Building density near transit can reduce the cost of housing, increase transit ridership, and stimulate development of businesses and schools to serve residents. “We want to put housing in places that are conducive to, or already have, amenities that people who live in affordable housing can access,” says Humphries.

A grassy hill across the street from Atlanta’s City Hall that had been empty for decades will be the site of a 228-unit project that includes 200 affordable housing units and ground-floor retail.

“What I really like about the incubator and working with Ben McAdams is that we're looking at our land and our tools differently, in a way that I'm really optimistic will make the city a much more affordable and accessible place for residents,” says Humphries.

The city of Lancaster, Calif., came to the incubator with a history of leveraging public assets. Work that began with installing solar panels on city buildings and school property and a commitment to becoming the nation’s first net-zero city set the stage for a series of groundbreaking public and private collaborations.

Eventually, the city became a renewable energy supplier for its citizens using existing transmission lines, drawing on electricity from its own generation as well as other nearby solar and wind resources. It then partnered with nearby jurisdictions to bring clean energy to other cities in the region. Rather than being an expense, electricity now provides about a fifth of the city’s budget.

Before its involvement with the incubator, Lancaster had worked with Urban3 to analyze the costs and revenues associated with its road system. Lancaster’s development has traditionally followed an urban sprawl pattern, says Sydney Yeseta, the city’s assistant manager for economic development.

A focus on infill within the city’s core and higher-density developments could provide more value. The city’s solar efforts show a willingness to take risks, but better understanding of the value of its assets is important to leveraging them to their highest potential, Yeseta says.

“We’re still trying to figure out how it will be structured and what it will look like, but we fully intend to create something like a UWF. We hope to come out of the incubator with a path forward that is functional and successful for Lancaster.”

The U.S. can be a difficult market for urban wealth funds, says Dag Detter. Aside from political barriers, public asset ownership is more fragmented in the U.S. than in other parts of the world where UWFs have been successful.

“I think what is often misunderstood is the scale that you need to do this on,” he says. “If you really want to have success you have to have a wide portfolio with some cash-generative assets and some that need cash.”

Fragmented ownership creates potential for vested interests to interfere with developing assets for the public good. Real estate is fluid; buildings can last 100 years or more in some cases, and if they aren’t adapted to meet changing needs, money and capital can be wasted.

“It’s much more productive to pull all the real estate together in one holding company and then look at what the city really needs,” Detter says. “You build, you develop assets into whatever it is that you need, and you have a business plan for this.”

Building a UWF at the county level is one way to facilitate the pooling of assets between entities including cities, schools, special districts and public utilities. It offers a sort of “back door” to economic efficiencies that could come from a city/county merger without necessitating a political process.

When government operations are funded by taxes, it’s inevitable that those who run for office will promise more than will be possible through tax revenues. That leads to borrowing, which means future tax.

Putting public wealth in a holding company can give government employees a chance to create wealth that can be transferred to future generations, says Detter. “When you have a wealth fund, you have a balance sheet and you can see if you are growing wealth for the next generation or not.”


As it explores new approaches to local government revenue, GFOA is also helping with budgeting research and the potential to think beyond yearly cycles. The “next generation”
perspective Detter describes could be an important part of this evolution and open the door to long-term investments to address challenges that require long-term attention, whether climate change, housing or education.

“Done correctly, this work can attract many multiples of private investments that can also lift communities,” says McAdams. “That’s going to have to be structured correctly and carefully to make sure the deals are structured in people's mutual advantage — not one that leaves government behind, which is too often the case.”

Joint efforts by “networks” of public-sector entities that pool assets in a UWF to maximize wealth-generating potential could be a step toward recognition of other ways to share capacity and increase efficiency, or inspire governments to incorporate other strategies that make them more entrepreneurial and adaptable.

“Communities all over the country are struggling to balance their budgets and to provide a high level of service to their taxpayers,” says Cate Ryba, “It’s mind-blowing to consider that there is this untapped resource literally sitting in front of them, but invisible in a way.”