THE U.S. COMMUNITIES GREAT GOVERNMENT SERIES

SEGMENT #4:

Improving Operating Results Through Public-Private Partnerships

By Steve Hamill

Government at every level today is being tasked with the burdensome challenge of providing the necessary infrastructure and services to meet the expanding needs of a growing population. Often times government agencies cannot meet these demands alone. Great Governments have explored and embraced public-private partnerships as another tool to help satisfy their responsibilities to residents and taxpayers, especially during the current economic downturn.

A public-private partnership describes a government service or facility which is funded and/or operated through a partnership of government and one or more private sector entities. Public-private partnerships exist in a variety of different forms but generally involve a contract between a public agency and a private sector entity, in which the private party provides a public service or develops a project and assumes certain financial or others risks in the service or project. Public-private partnerships have been utilized by Great Governments to improve service delivery, reduce costs, increase investment in public infrastructure, reduce public sector risk and deliver capital projects faster.

The Great Government Series focuses on the concept of improved operating results (“IOR”) and the role that it plays in the path to achieving greatness. IOR refers to new knowledge, ideas, methods or innovations that have been used by one or more government agencies to increase productivity, reduce costs and improve the efficiency and effectiveness of operations, services and programs. Public-private partnerships have a proven track record resulting in IOR for Great Governments which, in turn, benefits residents and taxpayers.

Public-private partnerships have been successfully employed to continue the operation and management of certain government services. In 2007, an intense budget crisis forced the closing of the Jackson County, Oregon library system. The County subsequently entered into a public-private partnership with a private library management company which re-opened the libraries and is saving Jackson County taxpayers approximately $27 million over a five-year period.

Great Governments have employed public-private partnerships to assist with the enormous operational and financial demands associated with maintaining water and wastewater facilities. In 2002, the City of Indianapolis entered into the country’s largest public-private water partnership with Veolia Water North America. The waterworks system serves Indianapolis, Marion County and portions of eight other counties in central Indiana. Veolia Water is responsible for 12 water treatment plants, 18 pumping stations and 15 water storage tanks. The 20-year contract valued at approximately $1.5 billion contains certain pay-for-performance incentives in areas such as customer service, water quality, capital improvements, operations and maintenance practices, and community involvement. The City’s partnership with Veolia has, among other benefits, resulted in taste and odor complaints at an all-time low and a five-year rate freeze being delivered to the City’s water customers.

A quickly expanding student population and aging classroom facilities have required that school districts around the country open new schools, however, traditional bond financing is not always feasible. Great Governments have taken advantage of public-private partnerships to get new school facilities constructed efficiently and economically. In 2005, Fairfax County, Virginia Public Schools (FCPS) entered into a public-private partnership with Clark Education to construct a much needed new secondary school in the southern part of the county. Clark was able to monetize certain parcels of unused Fairfax County land assets to save the County $25 million and it was able to deliver the project three years ahead of the budgeted schedule.

In 1999, Hillsborough County, Florida Public Schools (HCPS) entered into a public-private partnership with the Tampa Downtown Partnership. HCPS entered into a lease with an existing downtown church to house a new elementary school and the Tampa Downtown Partnership contributed towards the necessary capital renovations. This novel arrangement helped alleviate overcrowding in neighborhood schools, encouraged increased involvement from students’ parents working in the downtown area and saved HCPS millions by eliminating the need to construct a brand new school.

During these difficult economic times, many governments are faced with the unfortunate need to cut spending and accomplish more with fewer resources. Inspired government leaders are utilizing public-private partnerships as a valuable tool to achieve IOR and continue to deliver necessary services and facilities to their residents and taxpayers.

We view the Great Government Series as a collaborative and living effort. We welcome input from our government leaders and the public at large. If you have thoughts on great government or would like to share some examples of great government in your community, we’d love to hear from you. Please contact us at greatgovernment@uscommunities.org

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Steve Hamill is the former Assistant Chief Administrative Officer for Alameda County, California. He is the General Manager of the U.S. Communities Government Purchasing Alliance (“U.S. Communities”), a non-profit government purchasing cooperative founded by and currently co-sponsored by the United State Conference of Mayors (USCM), National League of Cities (NLC), National Association of Counties (NACo), Association of School Business Officials (ASBO) and the National Institute of Governmental Purchasing (NIGP). U.S. Communities assists local and state government agencies, school districts (K-12), higher education, and nonprofits in reducing the cost of purchased goods by offering managed access to competitively solicited contracts between suppliers and lead public agencies.