Public-Private Partnership Funding Benefits Communities, Supports Environmental Goals
For many communities, limited capital budgets result in using creativity to find funding for environmental programs. Often, this means dipping into reserve funds or looking for other options. For some, a public-private partnership is the best option for funding infrastructure needs. In a public-private partnership, a financial arrangement is negotiated between two parties that is beneficial to both entities in cases where neither would consider independently undertaking the project.
So what does this look like? Consider a recycling and solid waste project in Dallas. The city wanted more control over recycling operations and quality of the recovered materials but didn’t have the initial capital to build a new facility. While weighing options and strategies for funding, including host fees, public education fees, new market tax credits and private activity bonds, the development of a public-private partnership proved to be the best solution that would decrease costs by balancing risks between the city and a qualified private recycling vendor.
For this public-private partnership, the city leased space at its landfill to a private entity willing to build and operate a new recycling facility at the site. This financial arrangement is beneficial to the private entity because it offers a guaranteed quantity of recyclable materials to process, along with revenue from the sale of the recovered materials. The city benefits because it does not need to provide an initial capital outlay for funding facility development.
While a public-private partnership proves to be an effective strategy for many, another innovative option to consider is the design-build-finance route. With this approach, not only will the selected firm design and build your project, but it also will finance your capital needs. In exchange, the community would negotiate periodic payments to the firm handling the design-build and financing but would not need to provide the initial capital outlay.
With the evolving nature of projects, traditional methods of capital funding may not be adequate. As we look forward into the future, it’s important to use a fresh new perspective and continue considering alternative funding methods and different ways to address infrastructure needs.