MOUNT KISCO, N.Y. — In this rough economic climate, some New York legislators and business leaders are looking at using public-private partnerships to finance social infrastructure projects, an idea they hope will save money and create jobs.
State Sen. Greg Ball (R-Patterson) and the Business Council of Westchester hosted their third roundtable on such partnerships Thursday at the Mount Kisco Public Library, featuring four expert panelists.
Contractual relationships between the public and private sectors, whether for transportation, energy and water services, or capital improvements, can be a divisive issue: The many stakeholders, including labor, business and public sectors, have differing concerns.
However, one of the benefits of the practice is transferring risk and cost to the private sector when it invests in the public project. Sources for funding can come from both public and private sectors in the form of fees, tolls, commercial use of underutilized assets, and private equity and debt, among other sources.
One panelist, Joseph J. Bracchitta, chief administrative officer of the Yonkers City School District, is hoping to use a public-private partnership to rehabilitate and replace 38 school buildings. An initial concern was that maintenance staff would lose their jobs, he said.
But looking at the numbers, Bracchiatta said, the estimated $662 million cost of the building project’s first phase would generate 13,500 jobs in a variety of trades.
“There are lots of jobs down the food chain that happen when you do a construction project in schools,” he said.
The benefit of partnerships over going out for municipal bonds, said panelist Frank M. Rapoport, Senior Partner & Chair of the Global Infrastructure and Public-Private Partnerships of McKenna Long and Aldridge LLP, is that there is not the hassle of communication with contractors over project status, delays and change orders as there is under municipal bond. This means that since the private contractors do not get paid until they finish the job, they tend to work on an accelerated time line, he said.
“For every dollar you pay an architect who designs something, you pay the contractor $100, and then your operation and maintenance is $1,000,” Rapoport said. “That’s where the big money is. By making the contractor responsible for that $1,000 and not the government, you save money.”
At the meeting's conclusion, Ball said he would look into writing legislation to begin the public-private partnership process for the Yonkers public schools project.