Another Look at Public-Private Partnerships

Jan. 25, 2017

Recently Laura Sanchez, the editor of our sister publication Water Efficiency, questioned whether private investment in public works projects is helpful or harmful. As she discusses here, the much-needed infusion of capital from private sources is, in many cases, offset by rate hikes and the loss of control a public utility experiences. (She is addressing mainly water utilities.)

At about the same time, a report came out about an initiative to enable public-private partnerships, specifically for green stormwater infrastructure. The report, available here, was funded by the Great Lakes Protection Fund and co-authored by Environmental Consulting and Technology Inc., Corvias, and Encourage Capital.

The report discusses large-scale green infrastructure—defined as $50 million or more, which the authors say is about the minimum needed to attract private investors, whether that’s for a single project or a series of related ones. One of the report’s main conclusions is that stormwater utilities make it much easier to attract private investors; utilities generate a steady and dedicated stream of revenue that can be used to pay back the investment. For example, the report says, states like New York, Pennsylvania, and Michigan that have few stormwater utilities are perceived as less-friendly environments for private investors, while those with many utilities like Ohio, Minnesota, Wisconsin, Illinois, and Indiana are more attractive. The report estimates that the collective potential market for private investment for green infrastructure in the latter five states is more than a billion dollars.

Another important component is legislation that paves the way for pubic-private partnerships. Two of the Great Lakes states, Indiana and Michigan, have legislation that enables public-private partnerships for non-transportation projects, and others have authority that can be used to bypass the lack of specific legislation. Not surprisingly, the attitude of community leaders and their support—or not—for green infrastructure is also a big influence. For example, although Pennsylvania overall has relatively few stormwater utilities, Philadelphia has been successful in attracting private investors for stormwater projects because of a concerted effort by city leadership and the “Green City, Clean Waters” effort.

The report also provides tools and flowcharts that communities can use to gauge whether public-private partnerships are likely to work for them. Although it’s focused on the Great Lakes region, the report contains information and discussion of various financing options that will be useful to all stormwater managers. You can download it here.

About the Author

Janice Kaspersen

Janice Kaspersen is the former editor of Erosion Control and Stormwater magazines. 

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