Why aren’t more cities and counties embracing public-private partnerships?

At a time when project needs are so great throughout America, it is hard to understand why some cities and states have not endorsed public-private partnerships (P3s).

Billions of funding support is available for critically needed efforts, but many of the federal funding programs require some percentage of private sector investment, so the projects become somewhat of a public-private engagement. Is that why so many billions are still available with the funding programs scheduled to end in 2026? The federal government has also incentivized public-private partnerships with tax credits for investors. The amount of funding available through federal programs is historic and there is no assurance that the amount of funding that Congress made available previously will be reauthorized. In fact, the potential loss of this funding is a looming threat, with some saying reauthorization is doubtful.

City and county leaders in numerous states are grappling with budget issues. Public school districts are millions short on funding. Educational funding is needed for teacher salaries, facility repair, technology modernization and security upgrades. School districts also need new buses and equipment upgrades to lower operational costs. City officials cannot find adequate funding for public safety, water projects, technology modernization and public facility maintenance. These needs will not be met in 2025 because of budget shortfalls unless local public entities are visionary and aggressive in considering alternative types of delivery methods for innovative projects. The potential loss if these needs are not met is significant, underscoring the urgency of the situation.

However, many local government leaders are already reaping the benefits of public-private partnership initiatives. School officials, for instance, are launching P3 initiatives that not only support critical needs but also generate ongoing revenue for the district. By installing solar panels to cut power costs and constructing housing for teachers on campuses, they can return revenue to the district. Similarly, numerous city leaders are leveraging P3 projects to generate ongoing revenue through urban renewal, which in turn attracts more retail to downtown areas and increases tax revenue. Other cities and counties are launching projects that aim to attract more tourism, conventions, large tournaments, and entertainment seekers. Elected officials are also leading efforts to capture part of the billions available in federal funding for public asset recycling, renewable energy efforts, public safety expansions, and transit-oriented development. These types of projects not only address critical needs but also generate revenue for public entities when delivered through public-private partnerships.

Projects related to infrastructure resilience can be supported by federal programs designed to combat the ravages of weather-related damages. Why aren’t government entities seeking funding support? Do some federal funding programs require private-sector investment, or should the state provide grant writing assistance? Funding is abundantly available to regions of the country with water purity issues, and some cities received grants to replace old lead poisoning pipelines… but much of the funding is still available for similar projects. These funding programs end in 2026, so now is the time to capture the grant funding. Support will not be available after 2026.

Throughout the country, regional banks, non-profit organizations, economic development groups, and other interested parties stand ready to invest in critically needed projects. Almost every large public project qualifies for some sort of infrastructure funding support. Elected leaders are often stopped from launching such partnership efforts because there is no enabling legislation from the state if that is required. Unfortunately, even if state approval is not required, the hesitation and reluctance from local leaders are related to a lack of public support from statewide leaders.

Some regions in America are greatly benefiting from billions of federal funding support. Other regions are being left out, and the question is, why?

Private sector investment in public projects is not new, and there’s no question about the need to fund critical infrastructure initiatives. But the government cannot carry the burden alone. All parties agree that public funding will never be completely adequate again.

Public-private partnerships have existed in America for more than one hundred years. Collaborative initiatives supported by private sector investors created the country’s infrastructure from the very beginning of the colonial period.

There are many reasons for public officials to launch collaborative initiatives with private sector partners, especially when revenue generation is needed. Revenue-generating projects include recycling old and non-revenue-producing public assets to tourist attractions, museums, or offices that will be leased for new revenue.

Numerous economic development organizations are partnering with private sector investors

About the Author:

About the Author: As President and CEO of Strategic Partnerships, Inc. Mary Scott Nabers, a former statewide office holder in Texas, has decades of experience in the public and private sectors. Her unique expertise is her success in connecting the two sectors. Mary is also a well-recognized expert in the P3 world and a true business development professional. Strategic Partnerships, Inc. publishes Government Market News, the premier platform for connecting public and private sector leaders in the government marketplace.