Public-private partnerships – happening even in small cities, rural areas of the country

There’s lots of news about major cities launching public-private partnerships (P3s) to rebuild, upgrade and improve urban assets. The P3s have become attractive because of a lack of public funding and an abundance of private-sector capital just waiting to be tapped.

But, there’s not much news about P3s in smaller cities or in rural areas. That is about to change. As public officials in less populated parts of the country lament that the projects they need to launch are not large enough to capture the attention of investors or experienced contracting partners, some of their counterparts are forging ahead.

Many creative and innovative city leaders have found ways to get around all obstacles. P3s are now being launched for all types of projects in smaller cities and taxpayers will benefit as public assets are salvaged and/or improved.

Redevelopment projects are becoming common and most involve a private-sector partner. Smaller communities are revitalizing downtown areas, developing commercial ventures on non-revenue-producing property, building libraries, parks and repairing roadways through P3s. Such efforts always lead to increased property values and increased revenues for the city, and many of the P3 projects involve adding new revenue streams to city coffers.

One of the issues facing small cities and rural areas in initiating P3s is formulating a revenue model to repay the private investment of capital. And, another hurdle has been that the projects are not large enough to capture the attention of experienced contracting partners.  City leaders in many regions have solved that problem by consolidating a number of projects and finding ways to incentivize partners, bringing grant funding to the table and offering attractive benefits such as exclusive development rights.

Other incentives include long-term leasing agreements and revenue-sharing opportunities. One common thread is the use of Tax Increment Financing (TIF) in which future gains in taxes from a redevelopment effort are used to repay bonds that provide a financial incentive to an investor.

In addition to P3s for redevelopment, infrastructure and amenity projects, there are numerous examples of small city P3s that address broadband, water and wastewater facility operations and parking garages. New P3 projects are also emerging in the areas of smart lighting, solar energy, municipal facilities consolidation and green storm water infrastructure. 

In January, the city of Missoula, Mont., worked to finalize a P3 to redevelop a riverfront property. The project will include a conference center, hotel, parking, retail, restaurants, entertainment space, offices, housing and a public plaza. A large project for a mid-size city! The city is selling the riverfront property to developers and will buy a portion of the conference center and the parking garage once the facilities are built. The total project cost will be approximately $150 million.

Another new P3 is occurring in Salina, Kan., a city with a population of less than 50,000. The city just approved a $154 million downtown redevelopment project that includes $105 million in private funding, $19.1 million in state-issued STAR bonds, $9.2 million in Community Improvement District sales tax funds and $4.9 million in TIF property tax funds. The city will get a downtown hotel, a field house, new streetscapes, theater improvements, a museum and low-income apartments.

Another P3 in Texarkana, Texas, a city with a population of under 37,000, will involve a mixed-use historical preservation project. The city will get new residential space as well as commercial space on the first floor of a building that is located on city property. The revenue model includes HUD funds along with federal and state historic credits, an EPA cleanup loan and some conventional debt.

In June 2016, the city of Burlington, Vt., launched a P3 for a marina project.  The engagement allows the private-sector partner to build a 160-slip facility on public land and then operate the marina for 40 years. The city will receive lease payments for 40 years as well as public amenities. TIF funding will be used to help fund some of the amenities, including a parking lot and a park. 

In 2016, the city of Noblesville, Ind., inked an agreement with an athletic facilities developer to build the Noble Field House at Finch Creek Park.  The project includes a $15 million, 130,000-square-foot youth sports facility. Under the P3 agreement, the developer is responsible for all capital construction, operating and maintenance costs. Incentives to the developer include $300,000 annually in property tax reimbursement for 20 years, $250,000 annually from TIF funding for 20 years and the sale of 10 acres of land for $500,000.

City leaders in smaller cities are indeed becoming creative as they rebuild and upgrade public assets.



Image: iStock/Easyturn

P3s increasing the frequency of broadband across the United States

Having the use of the internet at home, work and anywhere else we take our mobile devices is a service most people rely on. A question that seems to come up that might make or break where a person might travel is “do you have Wi-Fi?”  Advancements in technology have delivered a variety of choices for internet users to get this local or wide-area network and this provides them with the ability to choose the proper equipment and provider for their home or business. Some of the broadband choices offered by an internet service provider are cable, digital subscriber line (DSL), satellite, fiber and wireless.

The term broadband means a high-capacity transmission technique using a wide range of frequencies, which enables a large number of messages to be communicated simultaneously. The transmission technologies of today make it possible to move broadband, bits of data such as text, images and sound, much more quickly than traditional telephone or wireless connections, including traditional dial-up internet access connections.

Today’s consumer wants information fast and when it comes to the internet we all feel the need for speed. The higher the amount of megabytes per second (Mbps) the better when downloading information onto the screen. Just one megabyte is one million bits of data per second.

Could you imagine not having the capability to connect anywhere in the world at any given time of the day? Think of a time when your internet service went down at work or home. Significant progress in broadband deployment has been made but these advances are not enough to ensure that advanced telecommunications capability is being deployed to all Americans in a timely way. The median download speed across all consumers last year was 39 Mbps, which represents a 22 percent increase from the year before, which had a value of 32 Mbps. This indicates that consumer speeds are continuing to increase.

According to the Federal Communications Commission (FCC) 2016 Broadband Progress Report, 98 percent of those living in rural territorial areas (1.1 million people) lack access to broadband. It also states that while an increasing number of schools have high-speed connections, approximately 41 percent of schools lack the connectivity to meet the FCC’s short-term goal of 100 Mbps per 1,000 students and staff. Several state and city officials have started looking at public-private partnerships to bring broadband services to more residents.

In January, Lt. Gov. Dan Forest introduced House Bill 68 to the North Carolina Legislature. The bill, also known as the BRIGHT Futures Act, stands for broadband enabled services, retail online services, internet of things, gridpower, health care, training and education. The act aims to clarify rules governing the ability of municipalities and counties to enter into public-private partnerships for communications services such as broadband internet and wireless internet. As municipalities enter into relationships with private entities, this can lead to expanding internet connectivity to rural communities which in turn would spur economic development and jobs.

In New Mexico, 68 percent of residents living in rural and tribal communities currently lack access to broadband. Sen. Michael Padilla’s Senate Bill 143, the New Mexico Infrastructure Act, could assist with this deficit and the bill passed recently out of the Senate Corporations Committee. The legislation allows state and local governments to join in partnerships with private companies to deliver broadband connectivity. The bill also includes authority for public-private partnerships to accomplish energy efficiency retrofitting of public buildings. Supporters hope it will give residents of New Mexico fast, reliable and affordable broadband access.

Supporters say expanding broadband access will help attract new businesses, investment and high-wage employers to New Mexico and connect small business to online marketplaces. Additionally, the projects stimulated by new public-private partnerships will lead to jobs related to the installation and maintenance of necessary infrastructure.

This past August, the FCC adopted The Alaska Plan to use funds to help bring telecommunication services to communities across Alaska. Without funding, Alaska telecommunications infrastructure and services would be a shadow of what they are today.

The Alaska Plan brings advanced broadband communications to even more rural Alaska communities and maintains millions in federal funds for Alaska’s telecommunications networks over the next 10 years. This successful public-private partnership will continue to strengthen and grow Alaska’s economy.

After The Alaska Plan was adopted it brought in a portion of the $4.5 billion national broadband support fund that has been committed to Alaska’s providers.

With The Alaska Plan, the Alaska Telephone Association, founded in 1949 to bring phone connectivity to Alaska, had participating wireless and wireline providers commit to invest $150 million per year in federal funds to improve and expand fixed and mobile broadband service to approximately 100 communities in rural Alaska over the next 10 years. Each company has made concrete, enforceable commitments to build, upgrade and operate the infrastructure necessary to bring broadband to the vast majority of rural Alaska residents.

The city of Grand Junction in Colorado wants to allow P3 partnerships for broadband and that’s essentially what the Grand Junction City Council asked of local, incumbent internet providers at a meeting this month. The inquiries come as the city is poised to enter into a stage of negotiations with their current internet provider to create an estimated $70 million high-speed, fiber broadband network in Grand Junction.

Councilors are asking the questions before signing onto a second milestone with the company and invited six other internet service providers to propose a plan. Grand Junction is considering building a citywide, fiber broadband network to 28,000 residential homes and about 4,800 businesses at rates to exceed $70 month for 1-gigabit service for residential consumers and $300 a month for business owners. A public-private partnership would allow a number of internet service providers to offer services over the network to provide services to customers.

These potential P3 opportunities are just a few examples of why broadband is an important tool and should be able to expand into remote locations and provide educational and economic opportunities for consumers.

SPI’s team of  public-private partnership consultants offer companies a competitive advantage on procurement opportunities. Contact them today.

NRCS accepting Regional Conservation Partnership Program applications

The USDA’s Natural Resources Conservation Service (NRCS) has invited conservation partners to submit applications by April 21 to receive federal funding through the Regional Conservation Partnership Program (RCPP). This is the fourth RCPP funding opportunity, which will total NRCS awarding up to $252 million all over the country to locally-driven, public-private partnerships that will improve the nation’s water quality, combat drought, enhance soil health, support wildlife habitat and complete a variety of other environmental initiatives.
Proposal applicants are required to match or exceed the federal award with funds provided by private or local sources. Created by the 2014 Farm Bill, the RCPP aims to connect potential partners with various entities to design and implement voluntary conservation solutions that benefit natural resources, agriculture and the economy. These potential partners include private industry, NGOs, Indian tribes, state and local governments, local soil and water districts and universities.

Home renovations cost $325M through P3/PPP

The New York City Housing Authority will invest $325 million for a public-private renovations plan. Through the federal Rental Assistance Demonstration program, the partnership will provide funding for renovations to the Ocean Bay Housing Authority development. Improvements will take place on 1,400 housing units at Ocean Bay that are home to 3,700 residents.

Ocean Bay was damaged during Hurricane Sandy in 2012, and the complex needs roof work as well as new boilers and heating systems and upgrades to elevator machinery. Renovations are also needed on interior and exterior lighting, kitchen and bathroom repairs and installation of new security cameras and new secure entry systems.

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