For a public private partnership, or P3, to be successful several things have to fall into place, according to Tom Pelnik, managing director at Ernst & Young Infrastructure Advisors:
- The project has to be commercially and financially feasible;
- There has to be clear legal authority for it to move forward;
- The partnership has to be carefully structured;
- The parties have to have a close working relationship; and, perhaps most important,
- It has to have political support from the local and, if necessary, state government.
“As soon as you’re talking hundreds of millions of dollars you need the political support of the … mayor or the governor or whomever,” Pelnik says. “Supportive means they’re willing to spend political capital to make sure that project gets done.”
Pelnik was among several speakers Tuesday at a symposium on P3s held at LSU’s E.J. Ourso College of Business and co-sponsored by the Urban Land Institute. More than 100 engineers, developers, attorneys and representatives from local governments around the state attended the event to learn how P3s could benefit their communities at a time when public financing for projects in many states is stretched thin.
P3s—typically structured to help finance large, multifaceted developments or infrastructure projects—don’t necessarily save money, Pelnick pointed out. But because the private sector has more flexibility in how it can spend its money, the model can be a more effective and efficient way of financing a project.
Baton Rouge has had several successful examples of P3s over the past decade, including The Shaw Center for the Arts, the IBM building and, most recently, the Water Campus, which is currently under construction.
Attorney Charles Landry, who was involved in structuring all of those deals for the Baton Rouge Area Foundation, told the audience BRAF’s participation and leadership was instrumental in making them happen.
“We’re trying to change a community and the foundation is the driver,” Landry said. “It is going to use its assets—not just money but relationships—the ability to call people and get them excited about a project. You have to have a nonprofit for my stuff to work.”
Another P3 currently underway is the Nicholson Gateway mixed-use development on the LSU campus. LSU officials say forging a strong relationships with its private partners and spending months on the front end to structure the deal and make sure everyone was on the same page have been keys to getting it done on schedule and under budget.
“Slowing it down got us to the end point and through the milestones faster,” said Tony Lombardo, LSU associate vice president, facility and property oversight.
—Stephanie Riegel
