Government Flashcards
P3s:
public private partnerships
Growing presence of P3s:
- increasing costs
- decreased public appetite for subsidies
How do the public and private have different value systems?
- public: looking for social, intangible benefits
- private: looking for financial returns
- potential for friction
How do the public and private have different constraints?
- public: bureaucracy, accountability, transparency (slower process)
- private: entrepreneurial, confidential (fast acting)
Incentives for private sector to work with public:
- access to land
- low-cost development capital
- zoning and permits
- tax incentives
Incentives for public to work with private:
- management expertise
- reduced labour costs
- adaptability to scale of service
- reduced liability risks
Public sector leasing:
- typically public entity owns facility and leases to private party
- buyout clauses
- conditions
Leaseback arrangements:
- public leases back from commercial sector
- can access equipment and facilities without up-front $$$
- construction borne by private sector
City and local pro hockey franchise:
- $3.3M project
- team builds and operates arena using tax-exempt bonds
- leases back 20% of ice to city
- city leases 8 acre land parcel for $1/year over 25 years
- team gets new facility and preferred ice slots for much lower than market rate
- city gets more ice for public use for opportunity cost of land
- team pays less than market price (lease and bonds) and guaranteed lease $$$ from city
Public sector takeovers:
- where public takes over private facility
- justifiable where the asset would otherwise disappear or sport and rec opportunities not provided elsewhere in the community
- can allow public purchase of asset at greatly reduced prices
Private sector takeovers:
allows public to pass on burden of operations
Private sector pump-priming:
- developer encourages public expenditure so that facility drives up demand and property values
- developer gets rid of tax burden on land, increase in other development
- public gets free land to build course, may make project financially sustainable
Example of private sector pump-priming:
Salt Lake City Winter Games
- real estate developer gives 386 acres to state agency for winter sports park
- in exchange, an access road was built to the park that was accessed through 750 acres of developer’s land
- agency also paid for power, water, sewer to 700 new residences and park
- land was worth $5M; 10 years later alone worth $48M
Expansion of existing public facilities:
- private business invests $$ for renovations, improvements, or expansion
- must ensure that construction is up to agency standards
Multiparty arrangements:
- quasi-government agency created to govern partnership
- usually a special authority or commission
P3s can be controversial, but allow both public and private sector to …
build and access amenities they otherwise may not be able to
