Timeless Business and Building Strategies

The Art of Public-Private Partnerships: How Ray Garfield Revolutionizes Infrastructure Development

• Tony Johnson

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Ray Garfield shares how his firm has revolutionized public infrastructure development by creating faster, more efficient alternatives to traditional government building processes. Helping public clients bypass lengthy referendums and inefficient bidding systems, Garfield Public Private has delivered nearly $3 billion in essential facilities through innovative financing and development strategies.

• Established in 1997, Garfield Public Private specializes in developing infrastructure for public clients like cities, counties, universities, and healthcare campuses
• Traditional public projects face delays through separate architect selection, design phases, and low-bid contractor requirements that often lead to budget overruns
• Their approach identifies alternative funding sources that don't require voter approval, significantly accelerating project timelines
• The company created innovative financing for Atlanta's courthouse using existing fine and forfeiture revenues rather than waiting years for a referendum
• As project leaders, they bring together architects, contractors, financial advisors, and bond counsel to deliver turnkey solutions
• Their portfolio includes convention centers, headquarters hotels, performing arts venues, courthouses, and other public infrastructure
• New ventures include Garfield Asset Management for ongoing facility oversight and Garfield Clean Energy for municipal solar projects
• Ray's background as a Navy pilot, Wall Street executive at Solomon Brothers, and public company CEO provided the expertise to create this specialized development model


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Speaker 1:

Welcome to another episode of Timeless Building and Business Strategies. This is Tony Johnson. Today, I'm here with Ray Garfield. Ray, thank you so much for joining us, sir.

Speaker 2:

Pleasure to be with you.

Speaker 1:

Ray is with Garfield, public, private and Ray could you tell us a bit about yourself and what you guys do?

Speaker 2:

Yeah, I'd be happy to. It's been an interesting career getting to this point. We've had this company now for the last 28 years and our firm is fairly unique in the real estate development business. We call ourselves Garfield Public Private because the great majority of what we develop around the country is for public clients, public agencies like cities, counties, state agencies, universities, health care campuses, airport authorities, etc. So we geared up in the late 1990s to help deliver essential public infrastructure to these public clients that wanted a faster, more efficient way of moving their projects forward than traditionally that they were allowed to do.

Speaker 1:

So could you break that down a little bit? So, in essence, are you saying that, as opposed to them going through the full design iteration process and putting projects out to bid, you guys are coming in at the concept stage and doing a design build option for them? Is that what we're saying?

Speaker 2:

I think that pretty well describes it. You know, certainly a couple of decades ago almost three decades ago now, when we started this firm, the traditional manner of delivering public projects was first advertised for an architect and then designed the building and then, once the designs were there, they put the designs out for contractors to bid on and they'd have to take the lowest bidder. They'd have to take the lowest bidder, you know. I mean conceptually they're protecting the taxpayers and making sure that they hire the least expensive option. That proved to be very inefficient because after a while contractors knew that they could bid low and then expect a lot of change orders in the process. So you'd hardly ever have a building that was built on time or on budget. And as you described it with design build when that came into fashion, beginning in the 90s, we were there to help create a different model where these communities could select a team. We could have the contractor and the architect designing and perfecting the designs ongoing as you went through concepts to schematics, to design documents, to construction documents. So when you got a guaranteed maximum price quote from the contractor in a schedule, that contractor knew the drawings he was evaluating. They knew that they could deliver this property in a certain period of time at a certain budget. So the end result was much superior to the old model, and that's a part of what we've done.

Speaker 2:

The other part is that also the traditional way of doing it is that if you want to build a courthouse, as an example, you'd put it on a public referendum. So you go to the voting booth May or November, whenever that's going to be and it's on the ballot. So you're going to vote yes or no. Do you allow the county to sell you know a $200 million bond to build a courthouse, or do you allow the school district to sell a billion dollars in bond to build high schools and et cetera? And if the vote's no, then they can't do it, et cetera. And if the votes no, then they can't do it, and if the vote is yes, then they'll go through this process.

Speaker 2:

We've never developed a building that has been approved with general obligation bonds, for example, when we developed the courthouse for the city of Atlanta, for example, when we developed the courthouse for the city of Atlanta, it was not on a ballot.

Speaker 2:

It wouldn't be on a ballot for four or five years at the time, according to the mayor. So we were invited there and we discovered that they had $25 million a year in fines and forfeiture revenues coming into the city and most of it levied by the judges, the court. So we just needed about $4 or $5 million in a lease back so we could sell the bonds that would be used to design and build a new courthouse, and so we found a different funding mechanism. We create innovative, very efficient structures from a financing standpoint that will help these deals move forward much faster generally. I mean, if we'd had to wait four or five years for a public referendum in Atlanta you can't predict interest rates, you can't predict inflation it would be a much more costly development in four or five years than what we were able to do within a year. So and that's just an example of one of the close to $3 billion worth of developments that we've done- that's interesting and I love that.

Speaker 1:

I think you know some. An instant question that comes to mind when I hear you say that is so you, I'm assuming did you already have a relationship here established. So I can't, I guess what I'm trying to ask is did you go in there when they're wanting to build a courthouse and them say it's going to be four to five years, not knowing anything, and say, oh well, let's look at some of your other sources of revenue and we'll put this package together and we'll get this thing built in a year? Or did you have a pre-existing relationship already with that?

Speaker 2:

We had a pre-existing relationship through our general contractor. Garfield Public Private was really created in 1997. That was the year after I had closed a merger. I was chairman of a public company Up until 1996, we sold the company to Syntex Corporation, which is the second largest home builder in the United States at the time, and I found myself without a job. I was out of a job, you found yourself out of a job, yep, yeah.

Speaker 2:

So on my board of what was Vista Properties that merged with Syntex was a fellow that was on the board of Turner Construction Company in New York and he became the CEO, chairman and CEO of Turner in 1996. And in early 1997, he invited me to talk about solving one of the issues that they had. So I worked for him for a year and sold a subsidiary of their company for them, and the following year he asked me to create what is now Garfield Public Private. He didn't want to own any of our company because they're a great general contractor and they do lots of construction for private developers all over the world. So he didn't want a no-name firm called Garfield, which no one had ever heard of, firm called Garfield, which no one had ever heard of, you know, seeming to have a close relationship for private developments. So we specifically targeted public developments where, at the time, private developers did not get involved. In fact they still do to an extent stay away from it because they can't invest in and own public properties. So they'd rather, you know, do their private developments apartments, shopping centers, office buildings, industrial buildings, et cetera. So we just focused on for Turner.

Speaker 2:

For about four years we were on a retainer with them and we created this business.

Speaker 2:

So Turner's office in Atlanta was one of the ones that we they had 44 offices nationally.

Speaker 2:

Their Atlanta office called us and said hey, we were at an Atlanta Falcons football game with the judges and they were complaining about being in a 50-year-old building and this was a great need of theirs.

Speaker 2:

So Turner brought us to Atlanta and introduced us to the judges and to the city and then we were able to, in a few days, determine that there were going to be avenues to pursue to help them solve the problem, get out of a 50-year-old building into a modern, secure, safe building and avoid that four to five-year delay of getting a referendum on the ballot for the voters to agree to or to turn down. So you bet 80% of our business, I think, is referred by either a general contractor, an architect engineering firm, a big hotel management company like Hyatt or Hilton or Marriott, big management firm for performing arts centers or arenas like ASM or OVG Oakview Group, the largest in the country, or OVG Oakview Group, the largest in the country. So, consultants, many of the opportunities come through us, through people that we've been on teams with before, that know our skills and how we're able to come up with some solutions that are greatly needed by these clients.

Speaker 1:

Yeah, I find this extremely interesting. So you know me, we're on the GC side, so we're a commercial general contractor nowhere near the size of Turner, obviously, but you know, yes, so we're. But yeah, so this, we run into this same challenge all the time. So with what you're saying it's great to hear, and I don't know, even with you being around for 28 years there's definitely probably a lot of expansion opportunities still today for what you're doing, because this can be used anywhere.

Speaker 1:

If you've got a system of going in and now have a track record of being able to put these creative projects together, that is definitely appealing to contractors. So I could see contractors beating down your door. Of course, you have to have a contractor that is established, that is able to perform and has you know this the county or the city wanting to partner with them. So for the public side, I completely understand that. And then you can find the public funds and you I'm assuming just your, your guise is upside is a developer fee established with putting everything together? Is that how you're structured? Are you in and out before the project breaks ground or are you involved throughout?

Speaker 2:

We're involved throughout. I mean, we really are a development firm but distinguished by the fact that our clients are in the public sector and, of course, in America. We're the only nation in the world that has legislation that's been on the books for a century or more, allowing the sale of municipal bonds, tax-exempt bonds. The sale of municipal bonds, tax-exempt bonds for cities, counties, schools, Federal government's not tax-exempt, but anything other than the federal government. You can do tax-exempt financing which is less expensive than conventional financing, right? So, unlike a private developer, we're not often asked to make an investment. In fact we just can't and still do something tax exempt. So for most of our developments we are an owner's rep, if you will, kind of an owner's rep on steroids, but we're the team leader. We bring the architect and the contractor to the table. We bring with the contractor his subcontractors. We also interact with the financial advisors, the bond councils, the underwriters, the attorneys and once we sell the bonds, of course we are helping to oversee the designs.

Speaker 2:

We have a couple of very well-established architects within our firm that don't draw anymore, but they did for years and now they interact with our architects and we have some great construction management people coming out of the construction industry that are on site with the general contractor every day, making sure things stay on track, on budget, on time.

Speaker 2:

And we're there when we open the building, cut the ribbon, have the grand opening and in certain cases and we're best known for doing convention centers and their headquarters, hotels or performing arts centers, event centers, expo centers, museums and so forth. So particularly with performing arts centers and hotels, we're able to stay on as the asset manager. So if Marriott runs the hotel 24 hours a day, seven days a week, we're there monthly, quarterly, annually. We're there to help sort of be an early warning radar with the general manager and so forth, make sure it's performing. Early warning radar with the general manager and so forth, make sure it's performing, make sure it's maintained, report to the bank trustee for the bonds or standard and poor's if those bonds are rated. So we do have a continuing role in a number of the properties that we complete. Thank you. Well, you know we're a team member, tony.

Speaker 1:

Yeah, absolutely.

Speaker 2:

And that's why a general contractor or an architect would refer something to us and say, hey, we know of a city here that needs X Y Z piece of infrastructure. They're scratching their heads on how they can do it in a year or so. Could you guys come in and join us and talk to them? And that's the introduction that helps us move forward on projects.

Speaker 1:

Yeah, this is you know. What I say a lot of times, ray, is you have to open your mind and you know you can't ever break barriers and do bigger things, or you know, if you don't first envision on how to do it. And I'm going to be honest, I've been building going on 20 years. At this point, this, to me, is Never heard of it. It's you know. This is absolutely amazing.

Speaker 1:

So, yeah, when I look at your portfolio, yeah, with your convention centers, conference centers, you've worked for multiple hotel chains, right. And so not only are you guys doing great things, you've niched down, you've created a specialty and I can 100% guarantee there is a strong demand for your services wherever you guys can get a stronghold. And I'm sure once you get in there, it then becomes a client, a repeat client or a referral to other near townships where relationships are then moving you over, right. So it's beneficial not only for the contractor, for that initial connection. I'm sure that that contractor and you then can grow and expand, because if you're able to do this for one area and that gets out, I'm sure you know anyone that they know in the next town over who's now never experienced, that wants to see if it can be utilized in their area to get something through.

Speaker 1:

Because the reality is, all of these local governments are in need of infrastructure upgrades and changes and waiting for referendums, and so if you're able to come in and really speed up that process, man, you're benefiting the town and the community and you know you're providing work for the community, and so I love the idea that you guys are then also coming in as an asset manager. On the backside, you have the knowledge and understanding of the bonds and how to manage the whole process. When you say you got into this in 97 after you went and joined Turner, did you put this together while you were at Turner from 97, 96 to 97? Is that when you established and kind of put all this together?

Speaker 2:

Yeah, I want to distinguish something you said. I didn't go to work for Turner. They retained our firm. We were arm's length.

Speaker 1:

Oh, okay, so sorry.

Speaker 2:

Yeah, Turner didn't. Turner did not want to own a development company, they were a contractor. So we were retained by them to be an outside provider of this particular skill of helping develop more design, build business for them, helping targeted clients of theirs to figure out how they could finance new big construction projects. So we were absolutely allied. I mean, for four years we were almost exclusive to Turner because they're such a big company. Four years we were almost exclusive to Turner because they're such a big company. And then Turner was sold to a European organization. Our retainer lapsed.

Speaker 2:

We still do business with Turner but we do business with many of the top call it 30 or 40 of the or 40 of the ENR 400 contractors around the country. So I wanted to distinguish that and I think that, as you've seen, we couldn't get hired in Texas. We were a Texas company but no one had heard of us. So we were hired by the Commonwealth of Puerto Rico to develop their new headquarters hotel for their convention center, their new headquarters hotel for their convention center. We were hired by St Joseph's Hospital in Patterson, New Jersey, and the state of New York to do a Department of Transportation office building and by Los Angeles schools. So we really had to sort of be the expert from afar and develop some some history.

Speaker 2:

And then we won our first deal in Texas back in 2000, I guess seven and delivered a great hotel and conference center for Lubbock, Texas. We then were hired again by Lubbock and in 2021, we delivered $160 million performing arts center, the Buddy Holly, which is a world-class acoustic performing arts facility that serves the community. We're just completing some designs for the Lubbock County for an expo center of over $100 million. Um and um and you know I you said uh, repeat business this. Certainly we're proud of the fact that not just lubbock but uh other communities have hired us a second time and even a third time, uh, to do new projects. Once we performed on that first project on that first project and at least after now, 28 years in the business, we're pretty competitive in.

Speaker 1:

Texas as well. But, still focus around the country. So what is the goal of your company?

Speaker 2:

How large are you trying to grow? How far are you trying to reach and how are a goal to protect our reputation and continually be successful, and whatever that means in terms of growth, in terms of employees and volume, we'll accept that as it comes. Garfield Asset Management about three years ago, because we were turning out so many performing arts centers and you know Durham's Performing Arts Center, utah's Echoes Theater in downtown Salt Lake and the Buddy Holly, et cetera, all the hotels we've developed for cities around the country we just felt like there was a good business model there to create. So we established Garfield Public Private Asset Management. A couple of years ago we created a company called Garfield Clean Energy and one of our repeat clients, a city in Central Texas energy, and one of our repeat clients, a city in Central Texas, had about 2,000 acres that they own and that was being farmed, and the mayor and city manager told us that they were hopeful of greater revenue for the city and something other than cotton farming.

Speaker 2:

So we've been working for the last year now on getting this property approved for solar and so, coincidentally, the Stargate program that was announced by Musk and the president and so forth, this half a trillion dollar investment in AI.

Speaker 2:

Their announced first big development is in this city in Central Texas, where we have this effort going to get approved for three or four or 500 megawatts of a solar farm. So we're optimistic about that. But it's a natural extension of our public-private business. In other words, cities need more than just a new courthouse or a new convention center and hotel or Performing Arts Center, and Solar is one of the more topical growth industries that you see as well. So we're doing that. We're talking about our expertise in hotels goes back 40 years or more when I was on Wall Street, capitalizing financing for major hotels, and so we are talking seriously about establishing an investment program to acquire existing hotels that need significant property improvement programs. So if we can buy them right in the right location, the right market, make those improvements, we can probably have a pretty effective capital investment program as well. So I think we just take let's just say we're a cautious organization, thoughtful and want to take steps when we really feel like they're the right steps to take.

Speaker 1:

Yes, sir, yeah, I think any you know it speaks volumes when, whenever we have a company that's, you know, been in business almost three decades, right that you guys have stayed true to your core values. So I love hearing that protecting your reputation, because reputation is all that we have and you know you've clearly defined something that gives you an advantage in the marketplace and niche down and, you know, rinsed and repeated, and that is the key to success with most businesses and that create longevity. So that's amazing. And once you have that stable foundation to speak to what you're saying, then you can, you know, expect to add different levers that complement what you're already successful, in which it sounds like you guys are planning for and continued growth. And so I love to hear everything that you're saying, because there's there's never a magic bullet.

Speaker 1:

With any successful business, no matter the industry, it is based on reputation, longevity, and being great at what you are doing successfully and then being able to replicate it over and over again is what creates the long-term success. So I love to hear all that, something that you know as we look through, you do other things as well. It looks like you're in sports and entertainment, and so you know doing parking garages. You guys have done other things as well. I think it's at office. So, besides those, could you give us an example of a private, a couple of private ones that you've done, or is everything that you're, I know, with the hotels? Obviously, a lot of those aren't private, right. So is there what are some private projects that you're working on now?

Speaker 2:

Well, yeah, over the last 28 years, each of the hotels that we've done has been a public-private partnership. Only one of those hotels has been financed in a conventional manner. The city wanted us to do that, so we brought in our own money and other people's money friends of the firm and developed the hotel. But the city and, let's say, high net worth individuals or foundations made significant contributions on the public side in this public-private partnership in order to do that. In order to do that Now, in the last year and a half, two years, we have led the design of a private hotel in the North Dallas area for a Japanese company. Toyota's North American headquarters is located in Plano, texas. This Japanese company wanted to build a Japanese-style hotel near Toyota, and so we have collaborated with them, sort of taken over the leadership of working with the architect and the contractor, helped select the contractor you know, taking this thing through concepts and schematics and DDs, et cetera. So, yeah, if we find a client that has substantial capital, doesn't need the kind of public-private skills that we've got, but really wants to build an impressive project, whatever it may be, we can act as a fee-only developer for them in these areas where we have this expertise, as I mentioned.

Speaker 2:

Now, we're really well known for doing these convention hotels and you could say also that that same public-private model can be done for airports, airport terminal hotels, college campus hotels, healthcare campus hotels and, of course, the city or municipal conference or convention hotels.

Speaker 2:

So there's a pretty broad swath of the hospitality industry that's there. But in the cultural arts area, where we started by being the developer of the Durham Performing Arts Center, which is hugely successful, and then went from Durham to Salt Lake City and helping to lead the development of the Eccles Theater, and then back to Lubbock after we had developed their hotel to be asked to help develop their performing arts center there, we've brought on some outside talent that had worked for a competitor in this cultural arts area. So you know we have a really deep resume of not only performing arts, arenas, event centers, museums and so forth. So that's at least half the business that we do around the country right now Working in Sarasota with the Sarasota Orchestra Development, working on the Phase II of Rothko Chapel in Houston, texas, and other cultural arts undertakings a major art facility, art museum in the country where we're going to help expand and modernize a very large facility. They've been in for 100 years. Those things are real targets of ours as well, so go ahead.

Speaker 1:

You've obviously been extremely successful in business and you've taken on massive projects. When you look at your run up to where you are now, was there anything pivotal in your career that really helped you skyrocket and get to the next level?

Speaker 2:

A couple of really important events, really important events. You know, I started my own firm when I was, I guess, probably around 27 years old, after I spent the first number of years in the Navy as a pilot. But then I and I worked for Ross Perot for a couple of years in the Navy as a pilot. But then I worked for Ross Perot for a couple of years in his electronic data systems company and learned a lot there because I had a great role of interviewing and recruiting clients all over the country. But I wanted to stay home because I had a young family. So I started my own little real estate company and in 1981, I sold that firm to Merrill Lynch. That was one of the defining moments in my fledgling real estate career of being able to list properties in the $3 to $5 million range at my little Garfield firm, to having a Merrill Lynch business card and all of a sudden listing $50 million properties because automatically you're looked at as maybe somebody that's more successful. Solomon Brothers recruited me from Merrill Lynch back in the 1980s when they were the king of Wall Street inventing commercial mortgage securities the 1980s when they were the king of Wall Street inventing commercial mortgage securities. That was the second real defining moment in my real estate career is working with you know, the mover and shaker on Wall Street at the time and innovating commercial mortgages. So that was sort of my PhD in real estate finance. So I've been able to use that very effectively in this particular company.

Speaker 2:

And I guess the last role I mentioned that I was CEO of this public company that had taken out of bankruptcy I was really the turnaround CEO and when I sold it to Syntex Corporation in 1996, and an interesting point of it I took this company out of bankruptcy in early 1992. And of course that was at the depths of a recession that we had in the country. The catchphrase was stay alive till 95. Yes, I did so. I turned this company around and sell it successfully in 1996.

Speaker 2:

And the irony is that in 1997, every CEO in the country, whether they were great or whether they were a doofus, looked like they were great because of the economy and so I figured well, I had a great success as a CEO of a public company. I'm sure another public company will hire me and in 1996, 1997, I got offered a lot of number two jobs and I just didn't want to do the number two job. So I started my own company and so 97 was our first year with Garfield Public Private if you will, but certainly built on all the experience that I had and I guess particularly at Solomon Brothers understanding Wall Street and the capital markets, understanding public bond offerings, understanding public bond offerings, municipal bond offerings, et cetera. That was certainly the key building block of doing this new company that I didn't really want to do, but I also didn't want to be a number two anymore.

Speaker 1:

So you know I love that. Well, I mean, that's it. That's what I always say. If you understand your strengths and weaknesses in life and what you will do and what you won't do for me, I will be reaching back out. Just I've had about 15 opportunities rolling through my head as we're speaking today. So, you know, I can only imagine where your company can go and I sincerely appreciate you taking the time and spending with us today and sharing some of your experiences. So thankful for that. And thank you for joining us today and sharing some of your experiences. So thankful for that. And thank you for joining us today, ray.

Speaker 2:

Thank you a lot, tony. I enjoyed it as well. All right, you have a great day, appreciate it Right. Bye-bye.