Category Archives: Public/Private.Partnerships

Governing garbage: Advancing urban sustainability in the context of private service delivery

Source: Jacqueline Peterson and Sara Hughes, Cities, October 2017

Abstract:

City governments across North America are increasingly pursuing sustainability aims through novel policies and practices. Such efforts frequently involve changes to municipal services that are provided by the private sector. However, the implications of private service delivery for public sustainability aims are not well understood. We use the experience of Minnesota’s Twin Cities metropolitan area with organic waste recycling to examine how different types of public-private relationships in service delivery shape the ability of municipalities to pursue sustainability through organic waste recycling programs. We find that municipalities with contractual relationships with waste haulers – “organized” systems – have greater success in introducing organic waste recycling than municipalities with licensing relationships with waste haulers – “open” systems. These findings point to the importance of institutional variation in public-private relationships to the success of urban sustainability initiatives and the ability of decision makers to affect change.

Taking the P3 Route to Reinvent Downtown

Source: Charles Renner, Public Management, July 27, 2017

… The past decade has seen a steady increase in the use of P3 structures, and 2016 was something of a watershed year with multiple high-profile projects coming online that address a variety of public needs, including a $1 billion water infrastructure project servicing San Antonio, Texas, the site of ICMA’s 2017 Annual Conference. In each case, the public sector identified a future need aimed at supporting the attraction of mobile talent, evaluated the limits of going it alone, engaged a P3 partner, and found leadership to achieve results. …

A Sioux Falls Renaissance … A key part of the updated Downtown 2025 Plan is increasing the CBD’s available commercial and residential real estate. To help accomplish this, Sioux Falls opted for a P3 solution to design, build, operate, and maintain a mixed-use facility with retail, office, and residential uses that will ultimately increase the density of downtown. …

Nebraska Innovation Campus and P3 … Located adjacent to the University of Nebraska-Lincoln, NIC is a research campus designed to facilitate new partnerships between the university community and private businesses. …

San Antonio’s Vista Ridge … As a result, the San Antonio Water System (SAWS) crafted the vision of a 142-mile water pipeline project called Vista Ridge that will deliver enough water for some 162,000 new families by 2020, providing a 20 percent increase in water supply. … SAWS opted for a P3 undertaking in order to engage private equity and much needed development expertise in securing and constructing a resource delivery project that requires roughly $1 billion in investment, thousands of private water commitments, along with the 142 miles of built-to-last water pipeline. …

Construction of long-awaited Purple Line begins in Prince George’s

Source: Sara Gilgore, Washington Busines Journal, August 28, 2017
 
The latest investment in the 16.2-mile, $5.6 billion project is a $900 million infusion of federal dollars, including the $325 million already appropriated for the project — funding the Trump administration had proposed cutting but saved partly because the public-private partnership building the Purple Line could serve as a model for other U.S. transit systems. The Purple Line P3, to be funded by the federal, state and local governments and the private sector, is the largest in the country’s history.  The system’s construction alone will mean thousands of jobs for the state — more than 6,000 construction positions and more than 400 ongoing jobs — and is expected to generate millions of dollars in economic development. …

Related:

MD: ARTBA: Purple Line legal woes seen as bad precedent for transportation P3s
Jim Watts, Bond Buyer, August 25, 2017 (subscription required)
 
A year-long legal delay in Maryland’s $5.6 billion Purple Line light rail system being financed as a public-private partnership poses risks for the future of similar transportation P3 projects, the American Road & Transportation Builders Association said in a brief filed with a federal appeals court. In its friend-of-the-court brief, ARTBA contends that federal Judge Richard Leon of the District Court for the District of Columbia misapplied the National Environmental Policy Act (NEPA) when he revoked the project’s environmental permits, stopping work on the project.  “Unless reversed, this precedent will have adverse consequences for complex transportation and related infrastructure projects across the country.” ARTBA said. “The district court’s holding injects new delay and litigation risks, thereby stifling the growth of this key financing mechanism to leverage and combine governmental and private dollars and responsibilities to meet the nation’s exigent transportation needs.” …

Purple Line P3 back on track for $900 million federal transit grant
Source: Jim Watts, Bond Buyer, August 22, 2017 (subscription required)

Maryland and federal officials will sign a federal funding agreement next week for a promised $900 million federal grant to help fund the construction of the $5.6 billion Purple Line light rail system being financed as a public-private partnership. The Purple Line would connect with the Washington Area Mass Transit Authority’s Metrorail system and Amtrak at several points on its 16-mile route through the Maryland suburbs of Washington, D.C. A spokesman for Maryland Gov. Larry Hogan said late Monday that the Transportation Department agreed to move ahead on the grant following “very productive, high-level conversations” between Hogan and Transportation Secretary Elaine Chao. …

Continue reading

Indiana bond sale to complete P3 takeover financing

Source: Nora Colomer, Bond Buyer, August 21, 2017 (subscription required)
 
The Indiana Finance Authority will price $180 million of highway revenue refunding bonds Wednesday to complete the financing piece of its takeover of a troubled public private partnership highway project.  The bonds will take out $210.7 million of bond anticipation notes issued by the IFA last week to redeem $246 million of private activity bonds as part of settlement agreements that terminate its contractual relationship with I-69 Development Partners LLC and put direct control of the I-69 Section 5 project under the Indiana Department of Transportation. …

Related:

Indiana Highway Gives ‘Black Eye’ to Private Investment in Infrastructure 
Source: Cameron McWhirter, Wall Street Journal, August 9, 2017

At a time when Washington is promoting private investment in roads, bridges and other infrastructure, a 21-mile stretch of highway in Indiana provides what critics say is a cautionary tale.  The project, a partnership between the state and private investors, was signed by Vice President Mike Pence in 2014 when he was the state’s governor. It is two years behind schedule and only 60% built. The state is in the process of taking it over and will have to issue debt to finish it. …

If Pence Shapes Trump’s Infrastructure Plan, Who Would Profit? Who Would Pay?
Source: Lydia O’Neal and David Sirota, International Business Times, August 9, 2017
 
President Donald Trump’s $1 trillion plan to rebuild America’s infrastructure may be unprecedented in its size and ambition — but it promotes a controversial model championed by Vice President Mike Pence in his home state of Indiana. The Hoosier flavor is hardly surprising: After his gubernatorial experience with road privatization, Pence has been a public face of the White House initiative, and executives from financial firms that helped privatize Indiana’s roads are now the Trump administration officials sculpting the details of the national plan.  As that federal proposal now moves forward, Indiana’s experience with infrastructure privatization has become a political Rorschach test. Pence and his allies are extolling Indiana’s record selling control of major roads to private firms as an ideal model, arguing that such public-private partnerships prompted corporations to invest money in Indiana infrastructure that taxpayers would otherwise have had to sponsor. …

Continue reading

With New P3, Delaware Partially Privatizes Economic Development

Source: Governing, August 16, 2017
 
Delaware’s economic development efforts are about to undergo a major transformation.  Gov. John Carney signed a bill Monday that replaces the Delaware Economic Development Office with a public-private partnership partially run by some of the state’s largest companies.  “This is a starting point,” Carney said. “The hard work starts now and that’s working together in partnership … to market our state more aggressively and think out of the box about how to develop our entrepreneurial economy.”  Tentatively called the Delaware Prosperity Partnership, the new nonprofit will be responsible for recruiting new employers to the state, supporting the state’s nascent startup community and investing in workforce development programs. …

Pennsylvania municipalities and utilities benefit from privatization, says Moody’s

Source: Paul Burton, Bond Buyer, August 15, 2017 (subscription required)
 
Pennsylvania municipalities and regulated investor-owned utilities will benefit from legislation removing hurdles for local governments to sell water and wastewater systems, Moody’s Investors Service said.  Moody’s in a report Tuesday projected more privatizations. Municipalities within the commonwealth Pennsylvania see utility sales as a way to cope with financial distress and sidestep maintenance and compliance costs.  The report examined the $195 million sale of the Scranton wastewater system and the pending $162 million sale of the McKeesport wastewater system outside Pittsburgh to the Pennsylvania-American Water Company. Regulators must still approve the latter. …

The Untapped Wealth of American Cities

Source: Bruce Katz and Jeremy Nowak, CityLab, August 6, 2017
 
Americans who travel abroad sometimes wonder why many of our airports are lacking in comparison to the best international airports. Or they want to know why other nations seem to do a better job with public transportation and the management of other public assets, from ports to parks. The answers we are tempted to give are that we do not invest as heavily in public infrastructure as many other nations and that a market-oriented American ethos with an entrepreneurial culture prefers private solutions (cars versus trains) to public ones. … But there’s another answer: Compared to many other nations, in the United States government has more direct control of public assets such as airports, convention centers, and transport, water and sewer systems (just to name a few). And the government does not, for the most part, manage them well, failing to leverage the market potential and value of the assets they own. Far from being broke, many cities and counties have enormous untapped wealth, which could be used to finance not only infrastructure but investments in children and other critical needs. …

There is a better way, teased out in detail and with great authority in The Public Wealth of Cities, a new book co-authored by Dag Detter and Stefan Folster, two Swedish experts in public finance. The pair have studied public asset management and are promoting a third alternative to political management or full privatization—public ownership that relies on professional, private-sector management.… The authors’ core argument is a disruptive idea in public policy that links management systems, public asset value, intelligent financing, and the proper role of politicians in a democracy. …

Infrastructure Borrowing Drops as U.S. States Await Trump Plan Details

Source: Reuters, August 6, 2017

President Donald Trump arrived in office having promised a bold $1 trillion infrastructure investment plan over 10 years for roads, bridges, airports and transit systems crumbling by the day across the United States. But nearly seven months later the administration has produced few details on the future of federal infrastructure funding, one reason why state and municipal governments have issued fewer bonds to improve roads, water systems and other projects so far in 2017. … Through July, new municipal deals to fund transportation, utilities and power projects totaled $50.7 billion, down 19.4 percent from the same period last year, according to an analysis of Thomson Reuters data. That decline outpaces a broader drop in the U.S. municipal bond market overall, with total issuance down 13.1 percent thus far in 2017 to $201.7 billion. New deals have lagged since November’s post-election selloff, when state and local governments quickly issued bonds fearing potential policy changes and rate increases by the Federal Reserve.

Related:

Lacking White House plan, Senate focuses on infrastructure
Source: Melanie Zanona, The Hill, August 4, 2017

Amid growing frustrating that President Trump’s infrastructure package keeps getting pushed to the back burner, some members of Congress are taking matters into their own hands. A bipartisan coalition from the Senate Commerce, Science and Transportation Committee has been discussing pushing its own bill if the administration doesn’t release something by the fall. The Senate Environment and Public Works (EPW) Committee has also been gathering input with an eye on drafting an infrastructure plan this summer. And several Republicans met at the White House last week to try to get the ball rolling there on the issue.

White House: Infrastructure bill remains Trump priority
Melanie Zanona, The Hill, July 31, 2017

President Trump remains committed to working with Congress on a massive infrastructure bill, White House press secretary Sarah Huckabee Sanders said Monday. The reassurance from the White House comes as GOP leaders have signaled that the timeline for Trump’s $1 trillion infrastructure package — which has yet to be unveiled — will likely slip to next year. “The president’s been very outspoken on the need for a massive overhaul to the country’s infrastructure, and that certainly is still a priority, both legislative and in any capacity that he has the ability to carry that out,” Sanders told reporters at the daily briefing.

Continue reading

Denver’s 34-year deal at DIA might be the city’s first big public-private partnership, but don’t expect it to be the last

Source: Jon Murray, Denver Post, August 13, 2017
 
Denver International Airport’s proposed $1.8 billion terminal deal is poised to launch the city into a different kind of contracting that hands over some control of a publicly owned space to private interests for decades.  Get ready: That complex, 34-year contract could be a harbinger of things to come. Mayor Michael Hancock and other city leaders see promise in public-private partnerships, which infuse both private money and management into public projects, as they prepare to build out the National Western Center with large new event venues, expand the convention center and plot big changes to the Denver Performing Arts Complex. …

Related:

Denver wants to create an office for public-private partnerships, and City Council fears being cut out of the process
Source: Erica Meltzer, Denverite, July 28, 2017
 
Denver Mayor Michael Hancock wants to create an office within city government that will screen, vet and shepherd public-private partnerships related to major city projects, like the redevelopment of the National Western Center and the Denver Center for the Performing Arts — and other projects the city might not even have anticipated yet.  Under the proposal, City Council would get to set the broad parameters of deals, but contracts would be finalized at the administrative level.  The effort is causing major concerns among some City Council members about what authority they’ll give up if the idea goes forward. That concern is only exacerbated as they debate the contract for the Great Hall renovations at Denver International Airport, a public-private partnership that will see Ferrovial and its development partners get paid as much as $1.8 billion over a 34-year period for a $650 million to $770 million project. …

3-year, no-bid extension for Alameda County’s ambulance contract, despite firefighter criticism

Source: Matthias Gafni, Bay Area News Group, May 10, 2017

Alameda County supervisors extended their ambulance contract with Paramedics Plus by three years despite fierce criticism by firefighters complaining the process wasn’t open for competitive bids and changes in service delivery were not included. … The agreement will lessen fines for failures to hit response times, saving the company about $3.5 million, along with other givebacks from the county, such as reimbursements for some 5150 (mentally unstable) transports and a continued break from paying support fees totaling about $5.5. million annually. The company has said it is bleeding money during its contract and needed the breaks, especially from the “draconian” fine system. Firefighters have complained that the extension should not have been awarded without a proper open bidding process. They believe ambulance service has suffered, and a change to the delivery system, similar to the Contra Costa County model pairing firefighters with private ambulance companies, is preferable. The vote came days after a judge dropped Alameda County from a federal lawsuit alleging it accepted illegal kickbacks from Paramedics Plus. The county was dropped from the suit because it agreed in April to pay $50,000 to the feds and $21,000 in attorney fees for accepting payments from the ambulance company. The company claims the agreement was legal. …

Related:

Opinion: Contra Costa ambulance deal slightly helps response time, but has taxpayer risk
Source: Daniel Borenstein, Contra Costa Times, November 2015

The private-public partnership, apparently the first in California, is probably the best option available because it should slightly speed response time and reduce service duplication, and might enable the county to tap some federal dollars that would otherwise be lost. … But Contra Costans should realize that the plan carries downside financial risk and, contrary to some suggestions, probably won’t provide significant upside benefits for the beleaguered Contra Costa Fire Protection District for years, if at all. … An outside consultant, using current collection rates, estimates that the fire district will collect $39 million the first year and pay out, primarily to AMR, $37 million, netting a $2 million profit. But there are two major caveats. First, the consultant, former Livermore-Pleasanton Fire Chief Stewart Gary, warns in his analysis that declining numbers of patients with insurance to fully cover ambulance bills makes projections difficult and presents “one of the largest risks.” Second, the new venture will need about $9 million of seed money to cover early operations before bill payments start coming in. That advance will come from the fire district’s reserves and must be repaid.

Supes approve new cost-saving ConFire/AMR pact
Source: Martinez News-Gazette, July 26, 2015

In a search to further savings in a cash-strapped district, Contra Costa Fire has proposed a new partnership with its longtime ambulance provider, American Medical Response. ConFire will take over responsibility for billing and collecting insurance reimbursements as well as the liability if anticipated revenue doesn’t materialize. AMR will essentially function as a subcontractor providing ambulances and paramedics for a set fee. The new approach comes with added risks for taxpayers, but CityGate said that declining insurance reimbursements threaten all public agencies responsible for providing ambulance services. If private providers can’t turn a profit, they said, taxpayers could be asked to keep them afloat. Alameda County’s ambulance provider, Paramedics Plus, recently asked for an injection of $5 million of public funds to cover some of its losses. Contra Costa supervisors said they were still on board with ConFire’s plan and directed the county to proceed with negotiating a five-year contract that would take effect next year.