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December 12, 2012
Benefits of Public-Private Partnerships

by Amanda Czepiel, J.D., BLR Water Expert

At the Water Environment Federation Technical Exhibition and Conference (WEFTEC), held earlier this fall in New Orleans, everyone was talking about and promoting public-private partnerships. The subject came up during the Water Leaders Session, U.S. EPA Administrator Lisa Jackson's keynote, and various technical sessions throughout the conference.  And the government has put its money where its mouth is by supporting partnerships through tax incentives that expand contract terms, as well as Executive Orders that simplify federal requirements for contract operations.

Although less than 2 percent of municipalities are engaged in public-private partnerships, the number is on the rise. Such arrangements use private sector resources to finance wastewater treatment, but allow municipalities to preserve ownership of their facilities. Why are these partnerships suddenly so timely? Probably because they offer a great cost savings which offset municipal budgets, create new tax sources, take advantage of economies of scale, and provide access to capital. But there are other benefits to these partnerships beyond the financial.

Public-private partnerships alleviate administrative burdens for a utility, and as a result, provide more time and resources to govern. In addition, by using a private enterprise, the risks involved with supplying drinking water to the public shift from the municipality to the private company. Private companies also provide a level of experience and expertise that municipalities, because of resource limitations, are not able to develop on their own.

However, when entering a public-private partnership, municipalities need to select their partner company well to ensure that the operation is financially viable and able to provide the necessary services and clean water to meet local, state, and federal requirements. Lastly, municipalities should review the terms of any partnership very closely to confirm any penalties for violation of contract terms and to ensure that provisions are included that guarantee that the private company works closely with government regulators and environmental stakeholders to maintain compliance.

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