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P3s Are Win-Wins, But Can Face Political Obstacles

As government and business continue the age-old battle over taxes, regulations and responsibilities, the use of public-private partnerships is as important now as it ever has been. From garbage collection to freeways to sports stadiums, these collaborations are critical answers to the question of how to get things done.

 

P3s Are Win-Wins, But Can Face Political Obstacles
Schwabe, Williamson & Wyatt’s Aaron Laing, Swinerton’s Gary Chubb, Kōz Development’s Cathy Reines, the Washington State Department of Commerce’s Allison Clark and the Downtown Seattle Association’s Jon Scholes

The benefits of these partnerships were discussed at Puget Sound’s CRE Business & Policy Summit last week.

Public-private partnerships are becoming increasingly important in shaping our cities, Downtown Seattle Association President and CEO Jon Scholes said.

“At the core, public-private partnerships have to deliver private value and public benefit.”

They can help solve the problem of affordable housing, Kōz Development President and CEO Cathy Reines said. She shared that the company’s University of Washington Tacoma’s affordable student housing project is a successful P3. Of the 104 units, 52 are designated for homeless and housing-insecure students. The rent of a fully furnished apartment includes utilities and is subsidized by the Tacoma Housing Authority.

P3s Are Win-Wins, But Can Face Political Obstacles
Schwabe, Williamson & Wyatt’s Virginia Nicholson, Beacon Development’s Brian Lloyd, HDC’s Marty Kooistra, Bellwether Housing’s Richard Loo and the City of Seattle’s Sara Maxana

Reines said the experience is fulfilling. 

“Those students are 18 to 62 years old,” she said. “One resident is a mom who was living in her car with a 6-year-old child. Once the residents are in the building, they are allowed to stay until they complete their education. It is a P3 program we are proud to be a part of.”

When negotiating the terms for P3s, both developers and municipalities must assume some risk, Washington State Department of Commerce Managing Director of Business Development Allison Clark said.

“It’s important to mitigate risk on both sides,” she said. “It’s about driving efficiencies and innovations. The private sectors can step in and put that forward.”

She said Paine Field in Everett is another recent example of a successful P3. It is operated by Snohomish County, but when it became apparent it would need to expand into a regional commuter airport to help ease the congestion at Sea-Tac, Snohomish County worked with Propellor Airports. Propellor was recently recognized by the National Council for Public-Private Partnerships for its innovative construction and design of the new passenger terminal.

While there are many stories of P3 success, they aren’t always that easy.

Swinerton Project Executive Gary Chubb said sometimes developers get caught up in political games of tug of war. The developer may be fully into a project that suddenly becomes politically unpopular. That can lead to an expensive stall in project development, especially during contentious local elections.

The avoid this fate, Chubb recommends companies take part in extensive community outreach prior to starting the project. By working with neighborhood associations and other local groups, the developer can start the process on solid ground and understand what the neighbors are looking for in the development.

P3s Are Win-Wins, But Can Face Political Obstacles
Bellevue Mayor John Chelminiak discussed how Bellevue has grown with intention.

Many of a community’s best assets are forms of P3s, Scholes said. 

“The zoo, the aquarium, the waterfront park. These are all examples of P3s that we use on a daily basis,” he said. “They are incredibly important. It’s OK in my mind that the private sector makes some money out of this. We won’t be seeing the federal government doing anything soon.”

Reines believes it is important both sides use some creative problem-solving to address the issues that the entire region is facing, such as affordable housing.

“There are opportunities in all the municipalities that we work in to modify policies to make the path easier and more affordable,” she said. “Creating more programs is a win.”