As support for necessary public infrastructure improvements sometimes becomes embroiled in divisive politics, local government entities explore other financial options. Into this void have come firms offering to create public-private partnerships with clients. This emerging field offers a cost effective, fiscally sound and long-term approach to managing risk and paying for buildings and renovations.
Community Facility Public Private Partnerships comes to the table with some notable advantages for clients. It has years of experience, successfully navigating projects across the country. The CFP3 staff also has the experience to help clients avoid the pitfalls of certain types of P3 arrangements.
National Council on P3 Principles
CFP3 fully endorses – and follows — the National Council on Public-Private Partnership’s seven principles of success. They include the following, as adapted from the National Council’s website:
1. Public sector champion
Projects need a recognized public figure to advocate and speak publicly on the benefits of P3. They serve as the spokesperson before city councils, nonprofit boards and the media. They need to be well versed in P3’s advantages while having a common touch with the public.
2. Statutory Environment
The statutory foundation required involves transparency through a competitive proposal process. The entire approach should be described in statute.
3. Public Sector’s Organized Structure
Public sector entities looking for P3 financing should have a dedicated team in place which can conceive projects, negotiate them and deliver execution. The skills include developing request for proposals, performance goals and value of money calculations.
4. Detailed Business Plan/Contract
P3s are contractual relationships between the public and private sectors for completion of a project or service. Contracts must include risks, detailed descriptions of the responsibilities and benefits of both the public and private partners. A good contract features a clearly defined method of dispute resolution in case of unforeseen problems.
5. Clearly Defined Revenue Stream
Private P3 partners generally provide a portion or all the funding for capital improvements. Over the term of the financing an identifiable revenue stream must be created to retire the bond financed investment. The income stream can be generated by a variety and combination of sources such as fees, availability payments, tax increment financing, commercial use of underutilized assets or a wide range of additional options.
6. Stakeholder Support
People impacted by the P3 partnership are not just public officials. They include employees, sections of the public receiving the service, labor unions, the press, and relevant interest groups. They will all have opinions and likely misconceptions about a 3P partnership. Communication is important to overcoming potential resistance and convincing the public that P3s are a fair, cost effective and worthwhile financing approach over the long term.
7. Pick Partners Carefully
Selecting vendors having the “best value” and not always the lowest price is a key to success in a partnership. Experience with P3 partnerships can be a requisite. The financial capacity of the private P3 partner should be considered.