Multifamily housing communities are leaning into P3s to get deals done, in market-rate and affordable housing communities.  

Public-private partnerships, also known as P3s, are proving to be good vehicles for developing and building multifamily housing communities once the nuances are mastered. “P3s are materially different from traditional private development,” said Charlton Hamer, Senior Vice President of Habitat Affordable Group at The Habitat Company.  

“We routinely work with municipalities, housing authorities, state financing agencies, county entities and, most importantly, residents. Financing structures are layered, approvals are iterative, and governance continues well beyond construction and stabilization. The result is the ability to deliver housing at a scale and affordability level that the private market alone cannot support.”  

Deal Types  

One of the most recent successful P3s for Chicago-based Habitat began with a project pulled out of receivership that adapted 3,000 public housing, scattered-site units. 

The Chicago Housing Authority quarterbacked another successful deal and kicked things off with plans to build housing around a public library. “The city of Chicago put out an RFP,” said David Block, Director of Development for Evergreen Real Estate.   

“We ran the city’s process to build these two buildings, and it was a very similar process in Denver. In that case, the city was more interested in the affordable housing pieces, and the city liked our idea of including a library. In Chicago, the library was the premise from the very beginning.” 

Attaching a building that has cultural significance is a common theme in many P3s. “Most P3s are mission-driven, meaning the public sector partner has identified a specific need or use and works with a private partner to deliver it, rather than following a purely arm’s-length development process,” said Tim Wheat, Partner with Miami-based real estate development firm Pinnacle.   

Many successful P3 projects begin when a municipality has a need and the political will to issue bonds to build something from the ground up. “The financing source for our P3 deals has been 100% debt financed using project-based tax-exempt bonds vs. conventional debt and equity,” said Jason Taylor, Managing Partner, Public-Private Partnerships for The Annex Group.  

In addition to student housing and market rate, Annex also develops, builds and manages affordable communities that typically include Low-Income Housing Tax Credits in the capital stack. “The pre-development period for P3s is lengthier than traditional multifamily due to the nature of financing and how far along the drawings have to be in order to close,” said Taylor. “Financing must be a collaborative process with the sponsoring institution, balancing traditional multifamily approaches with the sponsor’s priorities.” 

Mixed-use projects also lend themselves to P3 configurations. “CAPREIT, along with its joint venture partner, Barron Collier Companies, recently entered a public-private partnership with the City of Bonita Springs, to develop a 120-unit apartment community with 19,000 square feet of commercial space,” said Andrew Kadish, CEO and Chief Investment Officer.    

“The entitlement and approval process involved more stakeholders and required alignment not just on financial returns but on community outcomes — things like unit mix, retail activation and how the project fits into the city’s broader vision for the area,” he said. CAPREIT is a Maryland-based owner-operator that works in the market-rate and affordable sectors. 

“Timelines can be longer on the front end because of the public approval process, but the tradeoff is that you often have stronger community buy-in and a more collaborative relationship with local government once you get to construction,” Kadish said. “Even though city governments often provide the initial spark needed for a P3, private developers can also get a project off the ground if they know the right buttons to push. 

“In some cases, a private developer identifies an opportunity and approaches the city proactively, which is closer to what happened in Bonita Springs,” said Kadish.  “From there, the process typically involves an initial proposal and concept phase, followed by negotiations on deal terms — land contribution, incentives, development standards, affordability requirements — and then a formal agreement that goes through the public approval process.”  

When Things Go Wrong  

Successful P3s span building types and financial models, but not every proposal makes it to a ribbon-cutting ceremony. “When a P3 fails, it’s typically because the entire capital stack could not be assembled, the selected property was compromised in some way, such as environmental issues or the political will supporting the project changed,” said Wheat.  

The dexterity required to get everybody on the same page and dedicated to the same mission can be another weak spot in the arrangement. An inability to marshal the forces was a key factor in a failed project for Habitat.  

“Authority was fragmented across multiple agencies with overlapping, but not fully coordinated objectives,” said Hamer. “Key assumptions around land control, phasing, infrastructure responsibility and operating constraints continued to evolve after the project had been initially introduced to the public and underwritten. As a result, risk was incrementally shifted to us without a corresponding adjustment to economics, schedule or flexibility.” NIMBY-ism can play a role in any kind of development project including P3s.  

P3s on the Rise 

Despite the complexity of putting the deals together and the possibility of things coming unraveled, P3s are on the upswing in the multifamily development world. LIHTC access was expanded in the One Big Beautiful Bill Act along with Opportunity Zones.   

“P3s are not just more relevant, they are increasingly essential,” said Hamer. “Rising construction costs, higher interest rates, constrained subsidy resources and housing affordability pressures have rendered many traditional development models unworkable.”  

Having extra sets of hands, especially if they are employed by a participating municipal partner can make the difference in getting a project over the finish line. “If you can leverage the skills of an entire development team to build not just housing but a public facility of some type, you basically get one architect who can contribute their design vision,” said Block. “It’s probably going to be more cost effective than doing them separately. Tools that are available to the public sector are less available or sometimes not available to the private sector.”  

P3 housing development is drawing attention across all levels of govenrment. “Municipalities across the country are facing housing shortages and growing political pressure to address affordability,” said Kadish. “P3s give both sides something they can’t easily achieve alone. The public sector gets quality housing delivered by experienced operators without bearing full development risk, and the private sector gets access to incentives — land, infrastructure, entitlements, tax benefits — that can make otherwise marginal deals pencil.”  

Closing the Deal  

Multifamily housing owners, operators and developers who have never attempted to complete a P3 might consider leveraging advice from those with a good track record who know what to expect. “P3s don’t move at the same pace as a traditional acquisition or ground-up development,” said Kadish. “The public process involves multiple stakeholders, public hearings and political considerations that simply don’t exist in a private deal.”    

He recommends investing more time upfront to truly understand what the municipality is trying to accomplish by looking beyond what’s in the RFP. 

“Be transparent about what you need to make the project viable,” said Kadish. “The best P3s are the ones where both sides lay their cards on the table early. Assemble the right team — legal, financial and development professionals who have P3 experience. The learning curve is real, and you don’t want to be figuring it out on the fly with public dollars and your reputation on the line.” 

It’s important to align with the project at hand as well as preparing for the unexpected. “Be prepared to adopt institutional or state requirements that aren’t typical,” said Taylor. “Most of all, don’t proceed with the deal if you aren’t aligned to the mission of the institution. Anticipate longer and more costly procurement and predevelopment periods.” Many P3s also come standard with elements of community development and improving the social fabric of the neighborhood.  

“You have to really approach them from a mission perspective,” said Block “If your sole objective on a P3 project is to make a return, it’s probably not a great fit. If you really want your project to contribute to the community in the way that the city or county government wants it to, and you have a team of people who are aligned in that interest, you’ve probably got what it takes to do these things.”  

The projects often take the long view when it comes to not only completion but also social impact. “Recognize that a P3 is a long-term partnership, not a one-time deal,” said Hamer. “Governance, decision-making authority and dispute resolution mechanisms are just as important as initial economics. Be realistic about internal capacity. P3s require strong compliance systems, stakeholder management and the ability to balance financial performance with public mission and resident needs. Projects that succeed are those where expectations are clearly defined and revisited consistently as conditions change.” 

Scott Sowers is a freelance writer.