Leading The Way For Innovative And Visionary Action… And It's Coming From D.C.?
If there’s a manual anywhere on public-private partnerships (P3s/PPPs), it may have been written in Washington, D.C. But not, as one might suspect, by lawmakers in the halls of the U.S. Congress. The manual could have been written by some visionary locally elected leaders of the Council of the District of Columbia.
Many local government leaders are dragging their feet when it comes to using P3 projects for water and wastewater facilities, new public buildings, school classrooms and a myriad of other public projects. Not true in the District of Columbia! Leaders there are instead jumping feet-first into making P3s a useful and effective alternative funding mechanism to finance long-overdue needs.
A little over a year ago, officials in the District uncovered a gold mine. They embraced an alternative source of funding for past-due public projects - funding that helps the District avoid additional debt and also does not increase the tax obligation of citizens. The D.C. Council created the Office of Public-Private Partnerships (OP3).
The District’s budget was stretched to the breaking point and it was nearing its debt ceiling. Innovation and ingenuity were required to address some critical issues and numerous long-neglected projects. Private-sector capital and collaboration were attractive options.
Once the OP3 was created, it wasted little time in building a pipeline of projects that are now under consideration as P3s. The projects have attracted the interest of numerous potential private-sector partners. Three of the projects are already in the procurement stage and the remaining nine are under consideration.
Already in the procurement stage is a large P3project that will replace old bulbs with LED technology bulbs in 71,000 street lights. Other procurement stage projects include replacing two D.C. Jail facilities with a new Corrections Center and renovation of a building that serves as the District’s police headquarters.
Other projects that could become P3 contracts in D.C. show the diversity of projects that can result from collaborative efforts. Under consideration is consolidation of one department’s facilities into a single new campus, energy projects such as solar arrays, modernization of public buildings such as libraries and construction and maintenance of a new municipal waste management program and recycling center.
D.C. is not the only government entity coming to the realization that public-private partnerships can lead to quicker delivery of projects, lower costs and less risk to public entities.
The Texas Rangers professional baseball team partnered with the city of Arlington to build a new stadium. Universities are embracing P3s in a big way in Texas. Texas A&M University is using a P3 engagement to construct a $368 million, 50-acre student housing project. A&M, in fact, is considered a leader in the world of collaborative efforts between public and private partners.
Installation and maintenance of 15,000 energy-efficient LED lights on highways in Detroit as a P3 between the city and a private-sector firm saved the city $13 million. A major construction project in Long Beach was initiated through a P3 for construction of a 530,000-square-foot, $492 million courthouse. The terms of the agreement provided that the private partner would build and maintain the facility and the state would pay an annual service fee to the private partner for the use of the facility.
And while every project may not be large enough to attract P3 developers, some government entities are bundling several projects into one. A prime example is Pennsylvania’s Rapid Bridge Replacement project. The state’s Department of Transportation inked a P3 with a consortium of private partners to finance, design, construct and maintain 558 bridges at a savings of 20 percent over a traditional contract. Other great examples involve P3s between cities, community colleges and private-sector developers.
Taxpayers should take time to understand all aspects of public-private partnerships because these types of collaborative engagements offer a new way of preserving and protecting public assets. This is likely to become the norm in the near future.