Public Private Partnership (P3) Projects Post COVID-19
Last month, MGAC’s West Coast team joined Cox, Castle & Nicholson for our first virtual joint-session of the Adapting and Thriving Series titled “Confronting California’s Housing Crisis – In Search of a New and Resilient Model.” The session focused on regulatory, transactional, design, and construction challenges for housing projects.
The current economic climate and residual impacts of the pandemic will have long-term financial impacts and consequences to government budgets and projected outlooks. Specifically, townships, cities, counties, and states may experience fractured operating projections, capital campaigns, and tax base revenue shortages. This will likely result from unemployment, CDC mandates, protocols limiting businesses, congressional relief programs, and demographic shifts from populated urban areas into rural and suburban neighborhoods. The video clip included above explores Public Private Partnership (P3) projects in a post COVID-19 world.
These governments, however, still need to do the people’s business and serve their communities. Therein lies the opportunity to engage with the private sector to assist with executing the public sector responsibilities. The governments, or the public sector, still retain valuable assets, such as buildings, land, and ministerial or voter remits. Their assets can be leveraged to partner with the private sector to execute programs and initiatives as required. One of the many benefits of this public-private arrangement is it also creates a new tax base of developer lead projects. It can also create jobs within a community, and it can maintain services that the community needs.
Public Private Partnerships, or any other form of alternative delivery or alternative financing, is not necessarily new. We see them with buildings, toll roads, bridges, utilities, and waterways. However, this current economic cycle will inspire new, fresh, exciting, and innovative forms of Public Private Partnerships. To see the full virtual session, click the link below.
Some of the trends that we are starting to see at MGAC is a lot of the public-private partnership work, and prospecting for that. And I think that there are a couple really important reasons why. I mean first, as sort of a result of the combination of COVID, economy, and all of those sorts of things, there are a lot of cities, some counties even, and states that are going to be on the brink if not into bankruptcy. And the only assets they have to really leverage is land and entitlements.
And the government can’t just stop or shut down. And so, I think we’re going to see, and we’re starting to see, certainly from our perspective, more interest, and more appetite for true public-private partnerships where you have government lands, some type of a ground lease, and either a build-to-suite for a government entity or a quasi-government or some type of mixed-use, and even for this residential development, particularly where cities and counties have adopted their housing into their general plans and they have the ability to almost guarantee that type of housing and streamline the process for the approval of the housing elements that they’ve articulated in a general plan.