Don Fry Commentary on WYPR — Public-private partnerships have been used sporadically by cities and states since the 1980s for highway and transit projects. However governments, including Maryland’s, are showing increasing interest in such partnerships.

Since 2000, governments in the U.S. have entered into dozens of public-private partnerships for a wide variety of purposes, including transportation infrastructure, wastewater treatment, and economic development.

Such partnerships involve long-term agreements between governments and private businesses to build or manage a government-owned toll road, bridge or other facility. There are many variations, but a typical transportation-related partnership involves a company entering into a lease to operate a toll highway or bridge.

For the right to manage a road and to keep the tolls, a company pays government a fee – often a large lump sum of cash up front, which the government can use to fund other infrastructure needs. For instance, in 2005, Chicago leased its Skyway toll bridge for 99 years to a private company for $1.8 billion. In 2006, Richmond, Virginia leased its Pocahontas Parkway toll road for 99 years for $611 million.

Another type of partnership involves forming a non-profit organization to raise funds from private investors for a specific public project – an option recently used to raise $35 million in private funds to help build a new metro station in Washington, D.C.

Maryland law currently allows public-private partnerships. As state transportation officials, faced with a serious revenue shortage, are considering making greater use of partnerships, the Maryland General Assembly is moving to tighten its oversight of state partnership agreements.

The key to public-private partnerships are balance and value, according to a recent study by the Greater Baltimore Committee’s task force on transportation funding. Government must adjust its level of control over a resource in order to gain a substantial financial benefit from a private source.

The bottom line? Successful public-private partnerships are those that create a “win-win-win” for government, private partners, and taxpayers.

For the Regional Business Report, this is Don Fry, President and CEO of the Greater Baltimore Committee, for 88.1 WYPR, your NPR news station.

— November 3, 2009