Public-Private Partnerships (P3)

Public-Private Partnerships for Public Facilities Construction

Typically, the term public-private partnerships (P3) describes a public service or venture which is delivered through a partnership between government and one or more private sector companies. Conceptually, models involving an enhanced role for the private sector—with a private sector organization taking responsibility for defined aspects of service provision for a given project—can result in quality improvements, faster delivery of service, and reduced long-term costs.

In the US, private sector companies interested in entering into partnerships with government entities have often been thwarted by the daunting task of overcoming the education and communication gaps that exists in most public organizations related to private market solutions. And most public sector agencies don't have the expertise to negotiate public-private partnerships to ensure they are getting the best deal.

UPD’s team, with its detailed knowledge of, and experience with, public sector agencies, is equipped to help bridge this gap. Our P3 services help school districts, housing authorities and other public sector agencies understand and evaluate the costs and benefits of public-private partnerships, and paves the path—by educating constituents, getting enabling legislation passed, navigating local rules and regulations—that allows these valuable deals to move forward.

School Districts

In many urban areas—particularly in the Northeast and Midwest—population is declining and with it there has been a drop-off in the revenues available to address public school construction and major renovation needs.

In other areas of the country—such as the Southeast and Southwest—school-age population is rapidly expanding and some school districts are having difficulty building new schools fast enough to accommodate the growth.

Public-private partnerships present a great opportunity for school districts to effectively deal with these problems. Without having to identify any new revenue sources, school districts may be able to effectively shift risks and responsibilities to private partners better equipped to handle them. The results have been astounding: better quality schools, built much more quickly, and maintained at a higher level over the life cycle of the buildings, all for the same or marginally more money.

UPD can help your school district evaluate whether P3 makes sense. The services we provide include:

  • Feasibility studies to review the state and local landscape, identify existing costs and conditions, clarify district needs, and determine if there is "value for money" in potential P3 options.
  • Management of procurement processes to identify and select private partners and negotiation of construction and long-term operating agreements with selected parties.
  • Independent validation and verification ("IV&V") of assumptions and projections presented in unsolicited P3 proposals by potential private partners.

In many cases, especially in many large urban school districts, reducing excess capacity may be a necessary element to a long-term facilities improvement plan. UPD can help with that, too. Our professionals are experienced in managing the public input, local bureaucratic and political processes involved in any school closure process.

Experience in the U.S. and abroad suggests that school districts should have their own expert advisors to help them analyze and understand potential P3 deals. There is simply too much at stake to "trust" that you’re going to get a "good deal." The private sector will certainly spare no expense in understanding what they’re getting themselves involved in. UPD does not partner with or represent private entities seeking P3 deals with school districts. We sit squarely on the side of the table with the public sector.

Housing Authorities

Aside from more recent HOPE VI projects, most of the nation's public housing stock is decades old and in dire need of renovation or replacement. Unfortunately, public funds for such major redevelopment of public housing are drying up. The Housing Authorities that survive this drought are going to be the ones who figure out how to tap into the private capital and building management markets to obtain redevelopment resources. Public-private partnerships involving both construction and operating arrangements can be an innovative and effective option for modernizing Housing Authority assets. UPD can help you take advantage of that opportunity. Our services include:

  • Creation or assessment of strategic development plans which maximize the value of existing Housing Authority sites and leverage adjacent development opportunities.
  • Feasibility studies to review the state and local laws, identify existing costs and conditions, clarify Housing Authority needs, and determine if there is "value for money" in potential P3 options.
  • Identification of interested developer/management consortia willing to finance, construct and manage Housing Authority sites, especially involving mixed income and mixed use structures.
  • Independent validation and verification (IV&V) of assumptions and projections presented in unsolicited P3 proposals by potential private partners.

Other Government Buildings

Most government jurisdictions own a wealth of real estate. At best, they amount to non-productive assets. No taxes are collected on them, they aren't leveraged to obtain funds for other priorities, and they don't generate any commercial revenues. At worst they're a drain on the public coffers. Many are in a poor state of condition and require costly emergency repairs, large maintenance staff, and high insurance fees. Let us help you put those assets to work through public-private partnerships. It's a great way to generate new revenue to accomplish your mission. Examples of potentially beneficial P3s include:

  • The subdivision of a government-owned site with the proceeds of the sale and tax revenue of one portion paying for the rehab or new construction of a public building on the other.
  • Selling the air rights over a public building and tying the development of those air rights to the rehab (or new construction) of the public site underneath.
  • Leveraging predevelopment and construction costs by including the development of a public site (i.e., park facilities, library, police station, etc.) as part of a private housing, commercial or mixed use development project.

In these and other cases, the public sector is well-served in having an independent party analyze the potential deal to ensure the public is getting the most out of such partnerships. UPD’s extensive experience in the community and economic development arena makes us an ideal candidate for such assignments.