The Benefits of Ppp Model In Real Estate Development |

ABSTRACT:

The potential benefitsfor public and private partners from a successful PPP real estate developmenthave been identified and examined by many observers (Stainback, 2000; Morlock,1993). Economic development officials should be careful to note what steps andtrade-offs are actually involved in a PPP real estate development project.Typical projects require a series of actions from conceptualization through toproject completion, successful operation, and beyond. Since the objectives ofthe public and private partners can be different, and mutually exclusive, thenegotiation trade-offs aren’t necessarily as clear-cut as between two privateparties. In addition to the economic success of the project itself, two relatedfactors influence how each partner views its own success: (1) the contractualallocation of costs, risks, responsibilities and economic, fiscal, andfinancial returns and (2) the enforcement of these contractual arrangementsduring the timeline of the project. These are determined as the partnershipagreement (and the project itself) is structured and negotiated.The nature andstructure of the PPP agreement itself is particularly important. Morlok (1993)describes eight common-sense “guidelines for choosing a partner and making therelationship work.” These include careful selection of a committed partner,honesty and clarity about goals and objectives, and specific language detailingroles, responsibilities, and decision-making authority. Obviously, theselection of a (or which) private partner is vitally important. Wheneverpossible, some type of competitive-selection process should be utilized, bothfor appearance reasons and for obtaining the most aggressive or committedprivate partner. (Stainback, 2000; Sagalyn, 1996)