I recently had the opportunity to participate in a public-private partnership team proposal for a new courthouse project for Miami-Dade County. (Ventures of this type are commonly referred to by the shorthand terms PPP or P3.) I have not been heavily involved in the area of P3 ventures in the past; however, after having just participated in a proposal for this type of project delivery method, I was reminded how exciting it is, and I would like to share my thoughts as the court consultant team member in the P3 process in courthouse planning.
Governmental entities privately use the P3 process to finance and develop significant assets, including courthouses. To define it, the government works with a private development team responsible for designing, financing, building, and running the courthouse.
The Public-Private Partnership Process
Through the P3 process (public-private partnership), a sophisticated contract between the private developer and the government is put into place. The private developer designs and constructs the courthouse to meet the government’s needs. The government agrees to pay the developer back in monthly installments over a fixed period, say 30 years. This is similar to a home mortgage.
A significant difference between the P3 process and a home mortgage is that operations and maintenance can be included as a performance-based component of the contract. For example, the developer is tasked with keeping the courthouse in good repair; otherwise, the government can deduct money from the monthly payment as a penalty to the developer if the courthouse is not kept in good operating condition.
It is this latter point that fascinates me the most. I have seen so many courthouses that, neglected over time, now have extensive operational and maintenance issues. Tasking the developer with maintaining the courthouse to receive full payment ensures that such neglect will not happen.
Further, it is in the developer’s best interest to use quality, sustainable materials in constructing the courthouse and implement an aggressive preventative maintenance program following construction.
There is presently only limited use of the P3 process in the United States, though it’s used frequently in Canada and throughout Europe. Nevertheless, I expect to see more court jurisdictions embracing the P3 process. The traditional method of financing with bonds and taxes to generate significant capital outlays to fund courthouse design, and construction is a prolonged and often political process.
With less government funding required up front (although more will be paid over time, like a mortgage), a courthouse developed using the P3 process (public-private partnership) can often be delivered faster than if funded through traditional methods. When you add the promise that the courthouse will be kept in good repair for its functional (economic) life, the benefits of the P3 process should be considered as a potential method of financing more court projects.
Of course, the P3 process requires sophisticated project development and legal knowledge, and, as a result, contracts can take up to a year to put into place. Still, if done right, there are clear benefits to both the private developer and the government. I cannot help but conclude that governmental entities needing new courthouses should actively consider the P3 option to reduce initial funding while ensuring that its new courthouses will be kept in top operating condition for many years.
