Legal Affairs
Public/private partnerships
Public and private entities can achieve common objectives together.
Smart Business Akron/Canton | December 2006
The old saying goes, “You can’t fight
city hall.” Indeed, you may not
want to. More and more private entities are discovering the benefits of
working with governmental bodies to
enhance their business endeavors.
“A public/private partnership can be an
incredibly useful tool to further business
objectives as well as economic development goals of local governments,” says
Amanda E. Gordon, a partner in the
Public Law Group of Roetzel & Andress,
L.P.A.
Smart Business interviewed Gordon on the benefits that can be derived when
private entities partner with government
to attain common economic goals.
What is a public/private partnership?
A public/private partnership is an
arrangement between one or more local
governmental bodies (such as townships, cities, villages, counties, port
authorities, etc.) and one or more private entities to achieve common economic objectives. The arrangement may
take a number of different forms that
depend on the needs of the parties. It
will usually involve one or a series of
joint agreements that memorialize the
objectives of the parties, as well as their
respective rights, duties, obligations and
responsibilities.
How does a public/private partnership
work?
Through a public/private partnership,
local governmental bodies and private
entities can utilize their collective
resources and abilities in a collaborative fashion to realize mutual economic
benefits.
Among the resources governmental
entities may offer are financing for many
capital needs; tax abatements and incentives; other development incentives; infrastructure needs such as street
improvements and water, sewer and
other utilities; and zoning needs.
Private entities bring opportunities for
new business and/or business expansion, which bring jobs to a community
and additional revenues to the governmental entity. Private entities may also
agree to make certain contributions to
community and school programs.
Involvement by businesses in economic development projects also enables
local governments to derive other economic benefits, such as eliminating
blight and enhancing a community’s
socio-economic status.
What are the benefits of a public/private
partnership?
Businesses can benefit in a number of
ways from entering into a public/private
partnership. Often, the economics of a
particular project or endeavor will not
make sense unless governmental assistance is involved. In some cases, governments can offer tax-exempt financing
with significantly more cost-efficient interest expense than traditional corporate borrowings.
Tax and other development incentives
can reduce the costs to a private entity
to undertake a project and can also
reduce operations costs after a project is
completed. In addition, government
incentives can help businesses leverage
taxes and other expenditures while
advancing economic development
objectives.
What types of businesses can benefit from
a public/private partnership?
Nearly any business could, at one time
or another, benefit from a public/private
partnership. For example, businesses of
all sizes may need utility services such
as water, sanitary sewer, storm sewer,
lighting, etc. A business may need road
improvements ranging from resurfacing
to new accessway construction, construction of turning lanes, and installation of traffic signals and sidewalks.
Aside from capital improvements, businesses may also be able to benefit from
other programs governments may offer
such as tax abatements and other tax
incentives, job training programs or special grant programs, and tax-exempt
government financing.
Business and local government often
share mutual economic interests. They
also often have limited resources.
Pooling the resources and unique capabilities of both parties through a public/private partnership can be a helpful
tool in completing a project, resulting in
positive economic gain for all involved.
AMANDA E. GORDON is a partner with the Public Law Group,
Roetzel & Andress, L.P.A. She maintains a state-wide public
finance practice and has represented public bodies across the
state. Her experience spans all aspects of public finance law with
a concentration in general obligation, special obligation and revenue financing, economic development and regional cooperation.
Reach her at agordon@ralaw.com or (330) 849-6609.
