Public-private partnership (PPP) is a system in which a government service, for the use of the general public, is funded, designed and constructed through a partnership of local, state and/or federal government and one or more private entities. This method of financing is sometimes referred to as PPP or P3.
In the water and wastewater treatment fields, a private entity is formed that may consist of designers, builders, legal representation, bank lender, equipment supplier(s), and system operator or a combination thereof. It is this private entity that signs a contract with the jurisdictional government to design and build the facility and then to possibly maintain the system, at least through its initial start-up period. ACS DESIGN was a team member of the Moneta Resource Group (MRG), who in November of 2004 began work on the Moneta Regional Sewer System. This was the first wastewater project involving a Service Authority that was planned, designed and built in Virginia under the Public-Private Education Facilities and Infrastructure Act of 2002 (PPEA). A substantial portion of the capital needed for this project was offered by private developers who owned land that would be serviced by the sanitary sewer system. These developers were granted an agreed to number of connections to the new system without additional cost and the system is owned and operated by Bedford County through its Public Service Authority.
According to The National Council for Public-Private Partnerships (www.ncppp.org), a group whose mission is to “…advocate and facilitate the formation of public-private partnerships at the federal, state and local levels… and to raise the awareness of governments and businesses of the means by which their cooperation can cost effectively provide the public with quality goods, services and facilities”, there are six critical components of any successful Public-Private Partnership (PPP). They are:
POLITICAL LEADERSHIP:
A successful partnership can result only if there is commitment from "the top". The most senior public officials must be willing to be actively involved in supporting the concept of PPP’s and taking a leadership role in the development of each given partnership.
PUBLIC SECTOR INVOLVEMENT:
Once a partnership has been established, the public-sector must remain actively involved in the project or program. On-going monitoring of the performance of the partnership is important in assuring its success. This monitoring should be done on a daily, weekly, monthly or quarterly basis for different aspects of each partnership (the frequency is often defined in the business plan and/or contract).
A WELL THOUGHT-OUT PLAN:
You must know what you expect of the partnership beforehand. A carefully developed plan will substantially increase the probability of success of the partnership. This plan most often will take the form of an extensive, detailed contract, clearly describing the responsibilities of both the public and private partners. In addition to attempting to foresee areas of respective responsibilities, a good plan or contract will include a clearly defined method of dispute resolution (because not all contingencies can be foreseen).
A DEDICATED INCOME STREAM:
While the private partner may provide the initial funding for capital improvements, there must be a means of repayment of this investment over the long term of the partnership. The income stream can be generated by a variety and combination of sources (fees, tolls, shadow tolls, tax increment financing, or a wide range of additional options), but must be assured for the length of the partnership.
COMMUNICATIONS WITH STAKEHOLDERS:
More people will be affected by a partnership than just the public officials and the private-sector partner. Affected employees, the portions of the public receiving the service, the press, and relevant interest groups will all have opinions, and frequently significant misconceptions about a partnership and its value to all the public. It is important to communicate openly and candidly with these stakeholders to minimize potential resistance to establishing a partnership.
SELECTING THE RIGHT PARTNER:
The "lowest bid" is not always the best choice for selecting a partner. The "best value" in a partner is critical in a long-term relationship that is central to a successful partnership. A candidate's experience in the specific area of partnerships being considered is an important factor in identifying the right partner.
At a Public-Private Real Estate Partnerships workshop conducted by NCPPP on June 5, 2002, James Cuorato, the City Representative and Director of Commerce for the City of Philadelphia argued that for a partnership to succeed, it must have the following characteristics:
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It must be a real partnership, with shared burdens and shared rewards for both the public and private participants
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There must be real incentives for the private sector or they will not participate
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The public-sector must use its resources effectively and judiciously, focusing on projects where there can be success
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Keep it simple for the private-sector by minimizing the bureaucratic procedures that can cripple a project
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Remember that "Land is King"--it provides the public with the opportunity to control the projects
- Public-private partnerships are a necessary and important part of the process
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