Public-private ventures may build future schools, roads, water systems

ATLANTA -- Getting quicker, better and less expensive roads, schools, water systems and other government facilities may sound like unachievable campaign promises, but a Senate committee is studying a concept that supporters say has delivered in other states and Europe.

The idea is to create public-private partnerships, or what insiders call P3s. They would start with a state or local government agency announcing a need and then letting private businesses suggest ways to solve it.

It differs from traditional government procurement because it frees the companies to innovate instead of merely bidding on a set of blueprints specified by the bureaucracy. And the innovations should include ways to finance the project that stretch taxpayer funds by relying -- at least in part -- on company investment up front.

Instead of the Department of Transportation issuing copies of plans for building a bridge, it would merely announce that it needs a way to get more vehicles across the river. Companies might suggest a double-wide structure, a double-decker one or maybe even a tunnel instead.

“There’s a lot of trust involved. And people in state government, as least in construction, aren’t used to being that trusting,” said Kimberley Lipp, chief of architecture and engineering in the Virginia Department of Corrections where she’s overseen construction of two P3 prisons.

Virginia is the acknowledged P3 leader among states since it enacted the first legal mechanism in 1995. Last year, its governor committee $1.5 billion to P3 projects which will have at least that much or more private investment.

“I’m glad it’s working well because we want to try it here,” said Sen. Hunter Hill, R-Smrna.

Hill is the sponsor of Senate Bill 255 that would create the mechanism here for similar projects. Virginia’s P3 law has bipartisan support, and Hill’s legislation could draw broad backing as well, but it was introduced after the midpoint of the last legislative session, too late for consideration. So, Lt. Gov. Casey Cagle appointed Hill to chair a temporary committee of senators and industry experts to study the issue and make recommendations before the next session begins Jan. 13.

One of the Democrats on the committee, Sen. Hardie Davis likes the concept.

“I have a couple of projects in my mind for Augusta that are candidates for this bill,” said Davis who has announced plans to run for mayor of Augusta.

The partner corporations would not only supply the ideas but also some or most of the money. To get repaid and earn a profit, they would usually get the right to operate the facility for several decades for a fee.

In many cases, those fees would be paid not by taxpayers but by the users, such as toll roads or bridges, rents or surcharges. The details are negotiated by an agency panel and the company on a case-by-case basis.

In an era of tight government budgets, P3s appeal to politicians like Hill who aren’t eager to raise anyone’s taxes.

In Virginia, there has been some public grumbling that the process is so streamlined and so protective of company “trade secrets” during the negotiations that the users who’ll be paying the tolls and fees feel left out.

But the financing isn’t the only advantage, according to Bill Clark, managing principal of Stevens & Wilkinson Stang & Newdow, Inc. and representative of the American Institute of Architects.

“We feel this should be a value-added process, not just another way to finance a project,” he said.

Witnesses like Clark have offered the committee a host of recommendations to keep the process efficient and on target. Two GOP senators on the committee, Brandon Beach of Alpharetta and Steve Gooch of Dahlonega, previously served on the State Transportation Board when it was swamped with P3 proposals that the Department of Transportation never completed in Georgia’s only experiment with public-private partnerships. And the pair also has suggestions to keep the process effective if it’s going to be made available for every state and local government entity.

Hill’s legislation is likely to be one of the most heavily lobbied of the coming session, and to believe its proponents, one of the most beneficial. So, it’s likely we’ll be hearing much more about it in the coming months.

More