While response to public-private partnerships (P3s) at the state and local levels of government has been a little tepid in some parts of the country, federal agencies are forging ahead with all types of collaborative initiatives. Federal officials have acknowledged that partnerships with private-sector firms not only provide greatly-needed funding, but the engagements also bring valuable technical expertise and decades of experience and best practices from the private sector. Federal officials have been attempting to promote P3s, joint ventures and alternative funding.

So, while P3s are beginning to become almost common with large projects at every level of government, most of the collaborations have occurred in regions of high growth, aggressive economic development efforts and large populations of citizens.  But, there are huge needs in rural America as well.  Alternative funding options are desperately needed for smaller, but still critical, initiatives.  Addressing that issue, the U.S. Department of Agriculture (USDA) recently announced a program designed to make P3s more attractive to investors who might otherwise not be interested in smaller projects in rural areas.

Applications are now being accepted from rural counties for technical assistance related to economic development planning. The Rural Economic Development Innovation initiative, developed by USDA, is a collaborative effort that partners the USDA, the National Association of Counties, a private-sector engineering firm and two universities.

The goal of the new program is to assist and support rural communities by providing planning resources and assistance. Communities chosen to participate in the program will receive educational and interactive tools, training and assistance and other development resources.  Government officials participating in the program will be encouraged to form partnerships with neighboring counties to find solutions to rural problems. There will be no cost for counties chosen to participate in the program.  The technical assistance that will be provided will be focused on helping launch economic development projects that will strengthen communities.

fence 918535 960 720 Funding programs open up for rural joint ventures between public and private sector partnersIn addition to cooperative projects and P3s, rural communities also are benefiting from the creation of Opportunity Zones, a new program that encourages long-term investments in rural and low-income communities. This community development, tax deferment program was created by Congress. It is intended to incentivize private investment in low-income and rural areas by deferring and/or abating capital gains taxes in Opportunity Zone areas.

The program allows investors to defer taxes if profits from the project are reinvested in an Opportunity Fund. And, taxes will accrue to only 85 percent of the original investment if the investor remains in the fund for seven years. If an investment is held more than 10 year, taxes will be levied only on the original investment. This incentive is significant and more revenue will flow to projects in rural communities because of the program. Local officials in rural areas should begin marketing upcoming projects as soon as possible.

Other federal agencies, such as the Veterans Administration (VA) and the General Services Administration (GSA), now have P3 provisions within the agencies that encourage the use of similar collaborative efforts. And in many cases, P3s have become an integral part of their efforts to carry out their agency missions. The VA has sought partnership engagements for medical services for veterans and many of those partnerships are located in rural areas.

The current Strategic Plan of the Veterans Administration (VA) also includes information about how to enhance and develop partnerships. The VA is only one of a number of federal agencies that are attempting to promote P3s.  Current partnerships in place at the VA help enhance services, health professions and wellness education. The partnerships include collaborations with federal agencies, state agencies, health professional schools and associations and non-government agencies such as nonprofits to help improve benefits and services to veterans and beneficiaries. These P3s allow federal agencies to take advantage of the talents, innovative ideas and expertise of the private sector.

The General Services Administration in Washington, D.C., s is another large federal agency that supports P3s.  The agency controls the physical assets of the federal government – one of the world’s largest property owners. The GSA has launched P3s of its own and has also put in place a number of options for property management issues, such as disposal of excess or unneeded real property.  It, like so many other federal agencies, has seen its funding reduced by Congress at a time when its service demands are at an all-time high.  Officials have indicated that they would be doing more partnering if the agency simply had the required tools.

As long as funding is a problem, P3s will be attractive.  As long as there is a desire to shift project risk, benefit from private-sector expertise and contract for long-term operations and maintenance services, public-private partnerships will be attractive to government leaders at all levels of government.

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Mary Scott Nabers

As President and CEO of Strategic Partnerships, Inc., Mary Scott Nabers has decades of experience working in the public-private sector. A well-recognized expert in the P3 and government contracting fields, she is often asked to share her industry insights with top publications and through professional speaking engagements.