Public-Private Partnerships: An Attractive Funding Option for Public Projects
Mary Scott Nabers will be a facilitator for the NLC University pre-conference seminar “Developing Successful Public Private Partnerships (PPPs)” at the Congress of Cities and Exposition on November 19th from 9:00 a.m. to 12:00 p.m. in Austin, TX.
With burgeoning needs at all levels of government, elected officials throughout the country are seeking ways to fund large, and often critical, public projects. According to estimates by the American Society of Civil Engineers, an additional $1.6 trillion is needed just to cover costs of much-needed infrastructure projects during the next five years. There is, of course, no public funding available for many of those projects.
Public-private partnerships (PPPs or P3s) offer a very attractive funding option to public officials. These types of engagements have been common in most other countries for decades, but America has been slow to embrace the collaboration concept. The time to do so has come and the good news is that there is an abundance of information about what makes P3 projects successful.
A public-private partnership is a contractual agreement between one or more public entities and a private company willing to invest capital. P3s come in many varieties, sizes and types. In these engagements, almost all risk shifts to the private-sector partner and the public partner retains ownership.
Thirty-three states, numerous cities, the District of Columbia and Puerto Rico have passed some form of P3 enabling legislation. In spite of the acceptance, however, it is difficult to measure the number of P3s because not every collaborative effort is called a public-private partnership.
The public sector’s reluctance to move quicker and lead these initiatives in the past is understandable. Public officials are typically risk averse and most are somewhat uncomfortable with big changes. Much of the reluctance from government executives comes from having to make critical, long-term decisions involving taxpayer dollars in a transparent world that is changing almost daily. It is difficult for them to predict what will be required next year – much less two decades from now. They often have limited resources and too few guidelines. For some, it may appear as dangerous as walking a tightrope without a net.
Public officials worry also about not having the right type of expertise on staff. For example, their financial teams are unaccustomed to structuring creative and, or innovative revenue models. Their legal teams are not enthusiastic about negotiating with seasoned P3 attorneys from private firms. There are other inhibitors, but it is the fear of failure that creates hesitancy for most public officials.
P3s in the U.S. have become rather common for transportation projects. P3s are now being used to build school facilities, student dorms and city parks. The concept of collaborating and accepting private capital remains almost foreign to most public officials.
In Virginia, P3s have been instrumental in the construction of more than 30 school buildings. California is home to the hemisphere’s largest seawater desalination plant which was built through a public-private partnership. Pennsylvania just finalized an agreement to repair over 500 crumbling bridges with a long-term P3 concession. The Port of Baltimore deepened its berth to accommodate larger ships coming from Panama. Denver is building a rail line to curb road congestion. San Antonio is redeveloping its Hemisfair Park.
The P3 trend is gaining speed and it is imperative for public officials to become acquainted with best practices, the value of money concept, availability payments and all the other aspects of these types of collaborations. There are many information sources available. There is no longer a reason to delay critical projects because of a lack of funding.
If you haven't already registered for the Congress of Cities, register today and start making your plans for Austin. The NLC University seminars require pre-registration and have limited spaces, so act now to save your seat!
Mary Scott Nabers is the President/CEO of Strategic Partnerships, Inc. (SPI) and Co-Founder of the Gemini Global Group. SPI is a unique business development firm that specializes in procurement consulting and public-private partnerships. Mary is the author of Collaboration Nation: How Public-Private Ventures are Revolutionizing the Business of Government. Attendees of the seminar will receive a complimentary copy of her book.