By CREDC President, Mike Bomar
In February, the CREDC joined our three local ports at the 2015 Public-Private Partnership Conference in Dallas, Texas. The group undertook this effort to both learn more about public-private partnerships (P3s) and to highlight the amazing projects in which the ports have invested in order to attract private sector partners. While still a small percentage of the overall project portfolio, P3s are becoming an increasingly more attractive option for both public entities and private developers/investors. The P3 Conference site explains:
"Public-Private Partnerships are providing an innovative means for governments to deliver infrastructure at the municipal, state, and federal level. Partnerships between government and private industry create opportunities for innovative approaches to financing, developing, and maintaining major projects."
Before digging in too deep, it is important that P3 is defined in the context of our current exploration. The CREDC itself is considered a public-private partnership in the sense that we are an organization that utilizes investment and resources from both the public and private sectors to achieve a common good while leveraging the advantages of both worlds. For this effort, our focus is on public sector projects and assets that provide an opportunity for private sector involvement that creates efficiency not possible through the public system and its traditional financing options.
One lesson from the P3 Conference was that this type of project is not appropriate in all cases. There are many examples of projects that either belong as a purely private endeavor as well as projects that demand a fully public approach. P3 projects are often identified as significant (often $100 million or more) and having an outcome that necessitates public control of some aspect of the project while falling outside the core competencies of the agency tasked with the deliverable. At this conference, we focused on three project types that could potentially benefit Clark County with a P3 financing model: bridge/road infrastructure, hotels and waterfront development, and student housing.
As I write this, the Washington State Senate is currently considering a comprehensivepackage that includes an 11.7 cent gas tax to help fund $15 billion of transportation infrastructure projects. Included in this package is a series of reform bills. One of them, SB 5997, encourages the use of design-build contracts for state public works projects over $10 million. While this delivery method has its positives and negatives, it is an example of involving the private sector earlier in the process in an effort to create a more collaborative approach and streamlined process to deliver public projects. Taking it a step further, the state could consider financing models in which private investment funds projects up front while realizing a share of the revenue generated from the project over its lifespan. The George Washington Bridge Bus Station Renovation is an example of this type of project.
A common connection between all three local ports is waterfront redevelopment. The Port of Ridgefield's Miller's Landing project is an impressive case study in environmental remediation, now offering over 40 acres of high quality waterfront development opportunity. The Port of Vancouver is actively working on reinvigorating Terminal 1 with their Waterfront Legacy Project. This site provides a host of potential social infrastructure projects. Last but not least, the Port of Camas-Washougal is revitalizing its waterfront to bring the area to a higher and better use and to attract and enhance private development in that area. While these waterfront projects are all very unique in their potential and structure, each offers their port authority with an opportunity to look at how P3 models could enhance the final projects that end up on each of these key sites.
The third application of P3 that may have some potential in Clark County is around the financing of student housing. As WSU Vancouver continues to expand, it will inevitably need to consider on-campus housing and efficient ways to deliver this product. The conference discussed several aspects of P3 and higher education. Of particular interest were the potential parallels that can be drawn between the Military Housing Privatization Initiative (MHPI) and student housing opportunities.
A recent study by the Washington State Legislatures regarding P3s in Washington State transportation projects showed great potential for savings in utilizing this approach. The savings must be balanced with the risk and also include strict contract language and structures that protect the partners and the public. Our state benefits from companies with great expertise in the realm of P3s and certainly has a great demand for big projects, with limited resources to fund them. The Association for the Improvement of American Infrastructure (AIAI) is a great resource for tracking states with best practices for enabling P3 projects to move forward where appropriate.
There is still a lot of work to be done in our country at all levels of government to determine which projects and under what conditions P3s should be utilized. However, in an age of limited resources and an increasing expectation to address deferred maintenance and investment, entities should be given every opportunity to explore and utilize responsible P3 models that can deliver projects expediently while saving taxpayers money.