New School Construction: Private Capital Pouring In

Public-private partnership (P3) helps cover certain costs MaryScottNabers3fBy Mary Scott Nabers AUSTIN Texas (Texas Insider Report) During the last decade spending on education facilities in America increased more than 200 according to the U.S. Census Bureau. Even so there is still a critical shortage of classroom space. Population growth results in hundreds of new students each year.   There seems to be no argument that more classrooms are desperately needed throughout the country. Not only are new classrooms and facilities needed but old school buildings are also in dire need of repair and renovation. Declining revenues steadily increasing construction costs and taxpayers disdain for tax increases may push education officials in the United States to follow the lead of Europe and Canada.  Other countries are meeting education facility needs in a way that is somewhat new in America. In Canada the Government of Saskatchewan turned to the private sector for construction of 18 new schools. And they decided to build all the facilities at one time with private sector capital.  schoolA public-private partnership (P3) engagement was devised to cover design construction and maintenance. The partnership allowed five school districts to collaborate with input from students teachers parents and members of the community. Then a Request for Qualifications was issued for two bundles" of schools. From the interested parties a short list of finalists will submit proposals. Officials say there is both local and national interest in the projects which they are confident will drive competition that will net savings. Once finished the schools will be fully owned and operated by the public-sector partner. In Alberta more than 7000 students are attending classes this fall in a dozen new schools that were built through a public-private partnership. Since 2010 the province of Alberta has opened 40 new schools all built by public-private partnerships at a savings of more than $245 million to taxpayers. School officials in the United States are catching on. One of the early successes in P3s for public schools was in the Yonkers New York School District. Looking for an alternative way to meet funding needs the district entered into a design-build-finance-maintain P3 model with a private-sector partner. The school district makes agreed-upon payments to the private partner and the private partner agrees to maintain and update the buildings for 30 years. Lee County schools in Florida may be the next district to go the P3 route. Its school board has been studying P3s. Lee schools are currently at 90 percent capacity and school officials predict that the district will need eight new schools in the next 7-10 years. P3s are not new in Florida. They have been used successfully for years on transportation projects. But only last year did the state give local governments including school districts the UTauthority to enter into P3s. Texas was an early entrant into the P3 marketplace. In 1998 the Houston Independent School District formed a nonprofit corporation with a private partner to construct two new high schools through a lease-purchase agreement. The two new high schools together accommodated 6000 students and alleviated some of the overcrowding in the district. The private partner says the schools were completed a year earlier than they would have been if the traditional public-sector procurement model had been used and at a cost $20 million below the school districts original estimate. Another early use of P3s included a partnership between the Natoma Unified School District in California and a private real estate firm to build a $58 million high school. The private firm financed the construction and then leased the facility to the school until it could afford to purchase it. Many public school districts are finding P3s to be an attractive option for educational facilities. With a private partner paying costs up front the districts dont have to wait for state funding to begin construction. Projects are generally completed on time and on budget often saving the public entity millions of dollars. Times change and often the changes are good.  If  P3s that are anticipated in the near future continue to be brought in on time and under budget taxpayers parents students educators MARYand community leaders will all be smiling.

Mary Scott Nabers is president & CEO of Strategic Partnerships Inc. co-founder of Gemini Global Group and author of Collaboration Nation. Contact Mary at mnabers@spartnerships.com.

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