Public-Private Partnership (P3) delivery models will be prolific in 2023
Inflation fears linger, supply chain issues drag on, construction costs continue to rise… and those factors have created significant issues for public officials who were poised to launch new initiatives. Even bond packages that passed supporting local projects are now short on funding because of increases in the original estimated project costs.
Congress, in attempting to leverage large funding allocations, may have foreseen some of the issues because a large percentage of most new funding has incentives for private-sector investments in public projects. All those factors are escalating the attractiveness of public-private partnerships (P3s).
The P3 delivery method is quickly becoming a reliable, sustainable and efficient solution for critically needed projects. The type of upcoming projects now being considered for P3 delivery is expanding rapidly and the initiatives are extremely diverse.
It is important to remember that there are many different P3 models. In fact, a collaborative initiative can be structured in almost any way. Very few are developed the same way. There are, however, many common components. A few examples of the diverse types of P3 engagements follow.
In Greenwich, Conn., a $21 million ice rink will be renovated and upgraded along with $10 million for a park redevelopment initiative. City leaders, in fact, have identified several upcoming capital projects that will likely be delivered through a P3 engagement. The P3 model’s framework will allow Greenwich officials to accelerate timelines, offset costs and shift much of the risk. The plan is to outsource operations of the ice rink to a private sector partner. The park renovation project will also likely be delivered through the P3 model because of the same benefits. Relocating the city’s Parks and Recs division will also be part of the park’s renovation initiative.
A $170 million project in Iredell County, N.C., is being considered for a P3 is a new high school construction project. County officials agreed in a January meeting to begin the process of engaging with a private sector partner. The plan would be for a private sector partner to construct and then maintain the new high school facility. The cost, of which has more than doubled in price (to $170 million) since its initial, pre-pandemic estimate of $80 million. Some local funding will be available along with potential grants that can be obtained. The county and school board have agreed to schedule another meeting to discuss engaging a P3 consultant to provide assistance and oversight.
In Texas, the Raymondville Independent School District is seeking a private-sector partner to help address the area’s increasingly urgent housing shortage. The proposed P3 will be designed to deliver housing on the district’s surplus campus properties. The residential housing options may range from single-family homes, multi-family duplexes, and/or apartments but the objective is to provide housing to district employees and/or area residents. The sites will also be enhanced with features such as walking trails, pocket parks and possibly an events center. No total cost has yet been determined.
In Sussex County, N.J., P3 agreements are under consideration to deliver housing options for a community college. The Sussex County Community College recently issued a request for qualifications (RFQ) for potential P3 partners. Until the end of March, the college will accept responses from developers to design, build, finance, operate, maintain and manage multi-family residential housing units and/or a hotel with additional parking options. New construction to deliver other teaching facilities for the expanding technical programs on campus is also a part of the planned initiative.
The state of Tennessee is building support for P3 agreements to address critical infrastructure needs. In January, the governor of Tennessee presented the Transportation Modernization Act of 2023 that will facilitate P3 agreements to address an identified $34 billion in road repair needs throughout the state. In addition, several public institutions in the state are pursuing P3 agreements.
City officials in Miami Beach, Fla., are considering the P3 model to deliver numerous initiatives. Beginning immediately, the city of Miami Beach wants to build out a network of prequalified P3 consulting firms, which will conduct feasibility studies, perform cost analyses, identify public benefits, plan how to maximize revenue and perform a variety of other services associated with development of P3 agreements. Prequalified firms will then be available to perform those services for all future developments to which the city is a party.
The U.S. Army Corps of Engineers (USACE) is also starting to adopt the P3 framework for project delivery to streamline delivery, distribute risk and provide significant life-cycle cost savings for large-budget projects. Eligibility for P3 delivery applies to projects that have an estimated cost of more than $50 million; involve non-Federal sponsors; include a design, build, finance, operate and maintain (DBFOM) framework; or accelerate project delivery. One of the immediate major projects being piloted for P3 delivery is a waterway resiliency program in Denver, Colo.
A $350 million federal appropriation project is in the design stage as one of
USACE’s P3 projects will be designed to restore 6.5 miles along the South Platte River in Denver. Homes and structures surrounding the project site have faced persistent flood risk. USACE will partner with Denver County, the city of Denver, the Mile High Flood District and a local non-profit organization on a P3 to restore natural river habitats, provide flood protection and create spaces along the river that accommodate wildlife as well as wider recreational use. The Infrastructure Investment and Jobs Act (IIJA) allocated the initial $350 million in federal funding for the project, which is also included in the city of Denver’s One Water Vision plan.
These are but a few examples of how diverse projects are under consideration as potential P3 delivery engagements. Public officials interested in more information about P3 delivery models will find an abundance of information available online.