By Jennifer Dayton
Will the sun’s rays finally rise over the marsh grass of a former Electrolux site and bounce off a shining new civic center? Public-private partnerships hold the promise of mobilizing resources to accomplish more capital improvements for more people. One way or the other, Greenwich consumers of better amenities will inevitably contribute through taxes, donations and/or user fees. Public, private partnerships (P3s) are a great way to improve our amenities, as long as they are handled with care.
P3s match government interests and private interests to improve or create a public good. Typically, there are three types of partners: investors, private foundations and public nonprofits. P3s can be a finance strategy – securing immediate private funding while avoiding town debt. But, if funds are borrowed by the partner, private borrowing costs are higher than using public finance. P3s can also be a budget strategy – reducing town administrative cost/time, while transferring some execution risk to a partner. P3s potentially conserve government time and resources, employ best practices, improve town asset management and get favorable results through project controls and incentives. But private funding cannot avoid state and local permitting.
Private funding becomes a valued resource when town budget constraints defer important work. When P3 projects are funded by investors, elected leaders give up some measure of operational control and future revenue, in exchange for private funding. However, when P3 projects are funded by public nonprofits, elected leaders should not give up control over design or operation of town assets. In the high school stadium redevelopment, a local foundation conditioned pledged funding on building preferred structures. But, when elected officials propose a schedule, it reflects timing to meet town agency approvals, always more complex if a proposed structure is adjacent to wetlands. A donor organization, that conditions its donation upon executing a short term goal, reflects a different set of priorities. A new driveway to the Post Road and visitor bleachers are stadium priorities for the Board of Education, but require more time for state and local approvals. Generally, when P3 partners have overlapping, but not completely aligned objectives, it increases the chances for failure to meet schedule and/or cost.
Private donor naming rights bring questions for publicly owned and operated facilities, that do not arise for private nonprofits. P3s are not a solution for every kind of capital improvement. Do we want to be known as a town that values history and tradition? Will roads and bridges scheduled to be elevated or rebuilt have names for sale? Are we prepared for legal disputes over naming of buildings, such as occurred between the Sacklers and a school over name removal? What about the longevity of naming rights? As taxpayers, we want to avoid any future penalty, when a new donor for a renovation, conditions funding on its own naming rights. More communication on guidelines is important before the town enters into P3 agreements.
Citizen oversight of funding sources is important. User fees make sense when it is in the public interest to conserve a resource, or reduce usage of infrastructure. Town user fees do not reflect our values as a community, if residents of lower income cannot afford to use town facilities. Since user fees are regressive, meeting public expectations is only assured with outreach to the community. Funding projects through taxes and donations is more likely to sustain public commitment, since all residents will have a stake in a public good. In relative terms, if fees to use a new amenity become an increasingly larger portion of funding, and taxes and donations become a smaller portion, town capital needs are at risk of becoming seen as other people’s problems. Well-executed projects should always be a source of civic pride in the improvement of Greenwich.
The best outcome for P3s is an accelerated schedule for projects, but partnerships must protect the public interest. P3s will be a success if they allow town resources to be reallocated for other needed improvements, to serve a wider variety of important constituencies in town. Funding the new ice rink is a good model, that will take a combination of tax revenue, foundation donations and higher town user fees. We are fortunate to have in Greenwich, nonprofits and community and family foundations, capable of major donations. But the ultimate worth of P3s is whether their outcomes attract new taxpayers and increase future town revenue, leading us out of the marsh and into the light.
