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Government Leader home > August 2005 issue
August 2005; Vol. 1 No. 3
PORTFOLIO PROWESS: The emerging era of public-private partnerships
By Wyatt Kash
There’s a great irony in the way public-private partnerships have become one of the most successful, and yet, misunderstood tools of our time in advancing public service.
Done right, public-private partnerships deserve to be lauded as symbols of innovative management and creative problem-solving in the face of rising costs and dwindling resources.
Critics often point to deals where everyone profits, it seems, but the taxpayers.
But a growing body of evidence suggests that public-private partnerships represent not only a viable model for accomplishing some of government’s goals, but a model that ought to be more widely studied and applied.
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| | ”More needs to be done to capture and apply what works...and to train government leaders to leverage the government’s asset portfolios.” -Wyatt Kash | |
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Much of what is considered public-private partnerships takes the form of outsourcing. And there, the numbers are on the rise. Today, the average American city contracts out 23 of its 65 basic municipal services to the private sector, while states contract out about one in seven services, according to the Council for Public-Private Partnerships.
But it is the creation of value that comes from leveraging public assets, in combination with private resources, that represents the greatest potential for public-private partnerships to expand the return on taxpayer dollars.
This issue’s report on public-private partnerships (beginning on Page 12) reflects just some of the more recent ways these kinds of partnerships are taking root across the country and across the globe.
Public-private partnerships of course aren’t new to government. The first transcontinental railroad in the United States was but one of many instances where the federal government used its assets to attract private interests to jointly undertake a major project for the broader benefit of the nation.
Washington’s Union Station offers a much more recent example. It’s hard to imagine, walking through Union Station today, that just 24 years ago the building had deteriorated so badly from disuse that its roof collapsed and toadstools had begun to grow inside its Grand Foyer. Owned today by the Transportation Department but managed by a private development firm, annual retail sales exceed $70 million, supporting rents that cover the cost of the station’s operation and debt maintenance.
Many cities and states aren’t so lucky. There are practical limits to the revenues new developments are capable of generating. And finding win-win scenarios for private investors to help governments renovate school buildings, build wastewater plants or expand transportation systems is hard work. Even the best public-private partnership projects can also falter if performance contracts aren’t clearly spelled out.
That’s why government leaders could use more help. More needs to be done to capture and apply the common elements of what works in public-private partnerships; and to train government leaders to leverage the government’s asset portfolios, a skill that doesn’t come easily even to the most enlightened managers.
If governments are to provide more bang for the taxpayers’ bucks, few opportunities hold more promise than in developing leaders who are equipped to blend the mutual self-interests of the public and private sectors.
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