How does it work?

Public-Private Partnerships (P3s) are contractual agreements between public and private entities. Entering into a P3 allows public entities to undertake projects that they would otherwise not have funding to complete. P3s can often result in greater efficiency and even reduce the burden placed on taxpayers to pay for necessary infrastructure and other projects (e.g., renewable energy production, parks and trails etc.) by not adding to the public debt. Many states, including North and South Carolina, have legislation in place that enables public entities to enter into P3s to fund infrastructure projects. There are many types of P3 agreements ranging from Operations and Maintenance to Design-Build. Depending on the scale and scope of the project, a public entity may choose to retain ownership and management while the private partner designs and builds the project or a public entity may lease or purchase a new facility from their private sector partner after construction. Regardless of the scale of a project, the benefits of P3 agreements include the ability of finance important infrastructure projects in challenging economic times, improved benefits for private sector workers, and the ability to improve road safety and provide clean water. According to the National Council for Public-Private Partnerships, there are 7 keys to success for P3s.

1. Public Sector Champion – make sure that public sector representatives communicate the benefits of a P3 to the public.
2. Statutory Environment – P3s are generally more successful in states or localities with legislation that supports P3s.
3. Public Sector’s Organized Structure – a dedicated public sector team to implement P3 projects to evaluate new proposals and monitor the execution of existing P3s.
4. Detailed Contract (Business Plan) – a clear contract delimitating responsibilities for both public and private sector partners ensures that both parties understand the risk and benefits of a partnership and will contribute to the success of the project.
5. Clearly Defined Revenue Stream – before executing any partnership, ensure that there will be an acceptable return on investment for both partners.
6. Stakeholder Support – communicate all of the risks and benefits of creating a P3 to the public and other stakeholders (e.g., employees, labor unions, and other relevant groups)
7. Pick Your Partner Carefully – ensure that private sector partners are financially solvent and invested in the success of the potential P3.

While P3s are generally contractual agreements, other forms of Public-Private Partnerships may involve informal or formal agreements between public sector and community partners (e.g., non-profit and faith-based organizations, neighborhood associations, and community development groups). These partnerships do not necessarily tackle large infrastructure projects. Instead, they often work on smaller, neighborhood or community-based projects like streetscaping, community gardens, parks, home energy improvements, and other improvements and rely on volunteer time and donations.