2013: The Year of Public-Private Partnerships

"...America works best when it's calling upon the resources and ingenuity of our vibrant private sector."
-The White House, Rebuild America Partnership announcement, March 29, 2013

If the first four months of the year are any indication, we may look back on 2013 as the year of the Public-Private Partnership (PPP). In January's State of the Union address, President Obama called needed attention to the private sector's role in addressing our nation's pressing infrastructure challenges, announcing both his Fix-It-First proposal - designed to address critical repairs - and the Rebuild America Partnership - intended to leverage private resources in meeting these national needs.

Nowhere are these needs more evident than in the area of water. As detailed in the Water Is Your Business campaign - launched in February by the National Association of Water Companies (NAWC) and the U.S. Chamber of Commerce - our nation's water infrastructure is approaching a state of crisis. With 240,000 water main breaks each year, and a system of pipes and treatment plants that leaks enough treated drinking water each day to supply California, a change in the national "out-of-sight, out-of-mind" attitude toward infrastructure investment is both welcome and long overdue.

The momentum continued in March, when the American Society of Civil Engineers' 2013 Report Card on America's Infrastructure gave the U.S. water infrastructure a dismal grade of "D." Though a slight improvement from the 2009 grade of "D-," thanks largely to the mobilization of private capital, it's clear that additional investment is needed and that the private sector has a key role to play. This is a key message NAWC members carried to Congress during our annual Washington Fly-In (April 15th - 17th), and was an important part of the April 16th Water for Jobs National Water Infrastructure Summit - a first-of-its-kind conversation between public officials and private business designed to further elevate the critical national importance of water infrastructure investment.

As the nation continues this dialogue, the concept of the public-private partnership (PPP) will become an increasingly familiar part of our national lexicon. Simply put, a PPP is a contract between government and the private sector that delivers a public service or facility. PPPs offer a mutual benefit to both the public and private partners, allowing both sectors to share not only their respective skills and assets, but also the risks and rewards of service delivery. According to a recent report by the National Council for Public-Private Partnerships (NCPPP), studies have reported cost savings of up to 24% over the life of a PPP project.

More than 30 states have enacted legislation encouraging PPPs so far. In addition, former Governors Ed Rendell of Pennsylvania and Arnold Schwarzenegger of California, along with New York Mayor Michael Bloomberg, formed the Building America's Future Educational Fund - a Rockefeller Foundation-funded group dedicated to rebuilding infrastructure via alternative methods that include PPPs. The Brookings Institution's Hamilton Project estimates that infrastructure PPPs have increased fivefold in the wake of the Great Recession. These contracts typically enjoy high renewal rates, demonstrating the ability of a well-planned PPP to deliver high quality services and innovative solutions, illustrated by a number of examples.

The City of Holyoke, Massachusetts was challenged by a situation many communities continue to grapple with: its combined sewer overflow (CSO) system - so named because it handles both wastewater and rainfall runoff - could no longer handle current levels of both, nor could it meet modern environmental regulations designed to protect waterways from untreated overflows. When the U.S. Environmental Protection Agency required Holyoke to reduce overflows into the Connecticut River, the city sought a private partner to build a new CSO facility, upgrade its treatment and pipe system, and operate and maintain the city's water management for 20 years. After an in-depth selection process, the city chose to partner with United Water, a large investor-owned utility, and the resulting PPP saved the city $10 million in resources that it was able to invest in other government priorities.

Tampa Bay Water's expanding customer base - the result of a growing population - was quickly outpacing its groundwater supply. In developing a plan to meet these needs, the agency pursued construction of what would become the nation's largest seawater desalination facility. But desalination is no easy task, and though the original plant produced some water, its design caused the expensive filters to clog too quickly. After shuttering the plant, Tampa Bay Water partnered with American Water and Acciona Agua to develop a solution, and three years later, the renovated plant - with new technologies and efficiencies - was brought back online. The plant, with an expected lifespan of 30 to 50 years, can produce up to 25 million gallons per day of fresh water at far less than a penny per gallon.

When Seattle Public Utilities (SPU) - which receives much of its water supply from the pristine Cedar River Watershed - was faced with new water regulations, it partnered with CH2M HILL to develop a new treatment facility. The resulting plant was the first - and the largest in the nation - to combine ozonation and ultraviolet treatment technologies on a large scale, treating 180 million gallons of water per day (and expandable to 275 million gallons per day). In addition to exceeding water quality standards, the technology eliminated the expense of chemical use and filtration.

These are but three of many stories of ingenuity, resourcefulness and community that can be seen in PPPs throughout the United States. As the renewed focus on the condition of our nation's infrastructure continues, PPPs will play a growing role in ensuring that safe, reliable water service is secured for future generations of Americans.