Public-Private Partnerships

Management contract or public-private partnership arrangements between municipalities and private companies have come into widespread use since the 1970s. Under such arrangements, a municipality retains ownership of the utility, but a private company is brought in to run all or part of the operation. The municipality retains responsibility for setting rates and making necessary capital investments. Benefits of these partnerships include lower costs, guaranteed performance, strict environmental and safety compliance, increased opportunities for employees and shared liability. A public private partnership typically results in annual operating cost savings of 10 percent to 40 percent, allowing municipalities to avoid or mitigate increases in water rates. Today, more than 2,000 government entities contract with private companies to provide water and/or wastewater service. Since these companies are specialized in water and wastewater they bring a wealth of innovation and knowledge to local communities. More than 98 percent of these public-private partnerships are renewed annually, confirming the benefits of public-private partnerships to municipalities.

• One of every twelve Americans receives water and wastewater service form municipal facilities managed by a private partner in a public-private partnership.
  
  
• There are more than 2,000 North American communities served by a public-private partnership arrangement.
  

Resources

Establishing Public-Private Partnerships for Water and Wastewater Systems
An Evaluation of Public-Private Partnerships for Water and Wastewater Systems
Mayors Guide to Water and Wastewater Partnership Service Agreements

Glossary of Public-Private Partnership Options

Acquisition
Public partner sells facility to private partner resulting in private ownership and operation.

Joint Venture
Private partner owns facility in conjunction with public partner.

Concession or Built, Own and Transfer
Private partner builds, owns and operates the facility. At the end of the specified period, such as 30 years, the facility may be transferred to the public partner for a nominal fee.

Turn Key Facility
Private partner designs, constructs and operates the facility. The public partner retains ownership and generally assumes the financing risk, while the private partner assumes the performance risk for minimum levels of service and/or compliance.

Full Service Contract
Public partner contracts with private partner for a fee to operate and maintain the facility. The public partner owns the facility (although it may have been built by the private partner).

Contract Operations
Private partner operates and maintains public partner’s facilities over long or short term.

Contract Management
Private partner manages and supervises the public partner’s personnel.

Operations Assistance
Private partner provides transition management or program management to improve effectiveness of public partner’s operations.