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“They’re all so very different,” says Chris Lloyd, senior vice president with Richmond-based McGuireWoods Consulting LLC. Projects can differ in financial structuring and the types and amounts of public assistance, among other factors.
In the commercial real estate sector, public-private partnerships differ vastly from large public works projects. Investors and governments, for example, may wait 50 to 75 years to recoup their money on some toll roads. “On commercial real estate projects,” however, “you’ve got to recoup it on a much tighter time frame” because private developers are looking for shorter windows to gain a return on their investments, Lloyd says.
Some public-private partnerships are set up through local economic development authorities and may include grants, tax rebates or investment in specific portions of a project. Other projects are structured through Virginia’s public-private partnership law, which was passed in 2002. Unlike normal state procurement law, this law “lets you make the selection of procurement based on qualifications, not just the low bid,” Lloyd says. “You can buy the best deal all around, but you have to have transparency and accountability,” including public hearings, public proposals and outside review committees. “You can’t negotiate a deal secretly.”
Typically, real estate projects under public-private partnerships move faster than usual government development projects because the design and construction processes are not solicited separately. Developers are motivated to deliver projects more quickly by desire for profit and economic incentives built into contracts for early completion, Lloyd says.
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