By Louis J. Jenny | December 1, 2014
Design-build is an inherent part of a successful public-private partnership (P3). Due to this close alignment, DBIA helped get the word out on the inaugural P3s for Public Buildings conference recently held in Miami. The conference was jointly held by the National Council on Public-Private Partnerships and The Performance Based Building Coalition, two organizations that DBIA has been working with. I represented DBIA at the conference and made our new design-build primer available to attendees, cementing the fact that design-build and public-private partnerships go hand-in-hand.
This was the first conference in the U.S. that I know of focused solely on issues related to using P3s to facilitate the use of private investment in the construction, renovation or replacement of public buildings. This category, sometimes collectively known as social infrastructure, can include any sort of municipal buildings, including city halls, hospitals, schools, correctional facilities and court houses.
A primary goal of the conference was to educate public officials on the use of P3s for social infrastructure. Another was to discuss policies and legislation that can facilitate these arrangements because currently there is no public revenue stream for social infrastructure, as there is for other forms of infrastructure (e. g. the gas tax for highways, the revolving funds for water and wastewater, and others.)
Speakers at the conference discussed some of the realities that drive municipalities to consider P3s. These include financial constraints that all levels of government face, with some officials specifically stating that they have challenges in needing to provide new infrastructure yet have political mandates against any new taxes.
However, the motivation to explore P3s wasn’t just financial. Attendees also discussed utilizing P3s as a method to get infrastructure in place faster, to limit public risk and as an effective way to incentivize innovation.
Some of the challenges discussed were mostly misperceptions surrounding P3s, including the perception that owners lose control over a project with a public-private partnership or that the arrangements constitute privatization, a concept that often has negative connotations with the public, certain stakeholders and some elected officials.
Much of the discussions over two days in Miami centered on how best an owner can make sure a P3 is successful. And, much of what I heard is very similar to what you might hear at a DBIA conference, including the need for full buy-in and engagement from owners, the community, key stakeholders and political leaders, plus a deep understanding of why P3s are desirable and how they work.
Another important part of the discussion centered on federal taxation legislation which the Performance Based Building Coalition has been pushing (of which DBIA is an important and active member). This legislation would create a new class of tax-exempt private activity bonds that would allow private entities access to tax-exempt financing when in a partnership with public entity and financing social infrastructure.
The coalition leaders expressed some confidence in getting traction on the proposal in the 114th Congress convening in January 2015 and ways owners and private sector representatives can help promote and advocate for the legislation by reaching out to their Members of Congress.
The inaugural P3s for Public Buildings conference was definitely worthwhile. Organizers hope this becomes a regular event since the need for social infrastructure is enormous and P3s are far too underutilized. Further, there are enormous opportunities for educating the public and owners. These types of conferences are excellent opportunities for owners to talk to each other and to learn about successful domestic and international case studies, and for the private sector to showcase what it has to offer.