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Public-Private Partnerships Illuminate a Community's Business Environment

Companies choosing a location where PPPs are in place can benefit from the public and private sectors commitment to economic growth.

August 2012
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"The partnership produced a product with a 54 percent energy reduction and a 27 percent water reduction when compared to a conventionally designed home," states the National Council for Public-Private Partnerships. "The remaining 46 percent of energy is produced by photovoltaic solar panels to achieve a net-zero energy consumption."

Louisville continues to transform its downtown through public-private partnerships, including the KFC Yum! Center, a $238 million sports and multipurpose arena that opened in October 2010. A number of private-sector firms contributed to the financing, including Yum! Brands, in return for naming rights and other corporate sponsorships.

"The arena is a perfect example of public-private partnerships in action," says Alan DeLisle, executive director of the Louisville Downtown Development Corporation. "There were a number of different financing techniques that took place and many organizations came together to make it work."

Kern Economic Development Corp. in Kern County, California, is a public-private partnership that supplies the infrastructure and other assets needed for creating an attractive business climate and steady GDP growth. For example, it has dedicated a special team to work with alternative-energy companies; it has also collaborated with the local community college to create a skilled work force for this growing industry. Kern County also collaborated with Southern California Edison to upgrade transmission lines to handle the extra capacity these new companies would provide in the future.

"Without key members of the public and private sectors sitting at the table together, projects of economic significance could easily be held up in the system," says Richard Chapman, president and CEO of the Kern Economic Development Corp. "The essence of economic development stewardship lies in successfully guiding clients through permitting, site location, financing, and work force development in the shortest amount of time."

The Macon Economic Development Commission is the lead economic development agency for Macon and Bibb counties in Georgia. This PPP is funded primarily by the business community, with some funds from county government. Private companies participate in the PPP through its "Macon NOW" fund-raising campaign. Since 2004 more than $4.5 million has been contributed from the private sector to advance the commission's recruitment and retention programs.

"NOW has allowed us to strengthen our existing industry program, including hiring a manager," says Patrick Topping, senior vice president for the Macon Economic Development Commission. "We can now be more proactive in what we do, instead of strictly reacting to requests."

Parting Advice

Business owners should look at the political environment of the prospective community to see if the public sector has the mindset to promote the use of PPPs. Communities that embrace PPPs are more likely to respond collaboratively to create a healthy business environment.

Remember that not all PPPs are created equal. Look at their history of success, failure, or feuding - the structure can sometimes be complicated, especially with lots of stakeholders who may have special interests. Egos can get in the way and slow down or halt the entire process; the deal can also be based on overly optimistic financial projections that may lead to poor performance and finger-pointing down the stretch.

"The keys to a successful public-private partnership are having a public-sector leader/champion, solid statutory foundation, dedicated PPP team from the public sector, detailed business plan, clearly defined revenue stream, complete stakeholder support, and careful vetting of the private partners," says Norment. "If any one of these is missing there is a higher potential for failure in the project."

"How a PPP functions can tell a company a lot about how the community invests in itself to support economic development," adds Topping. "If done correctly, public-private partnerships encourage the business community to get involved in economic development and lessen the burden on the public sector to create new jobs and new investment in the community."
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