A-J
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Purpose of this Guide
The guide is primarily designed to give local officials the key information necessary to establish public-private
partnerships. Specifically, the guide provides:
A primer on what public-private partnerships are and the benefits that can be gained by working with the
private sector,
An action checklist, explaining how to build a partnership;
A review of financing, procurement, and the service agreement that binds public and private interests; and
A list of potential contacts and information related to municipal services, finance, and public-private partner-
ships.
Who Should Read this Document
Local governmental officials ( e.g., mayors, city managers, department heads, and city council members)
who are interested in developing public-private partnerships;
State governmental officials who need information on how to put together a partnership to use in working
with local government officials; and
Leaders in business, finance, banking, and industry who need to understand the constraints under which local
officials must operate in implementing a public-private partnership.
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Public Private Partnerships
for Environmental Facilities
A Self-Help Guide
For Local Governments
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Table of Contents
Section
Page
Foreword - A Message from the Assistant Administrator /
Executive Summary ///
Part I Public-Private Partnerships: What and Why 1
What is a Public-Private Partnership? 3
What Types of Activities Do the Partners Perform? 3
What are the Different Types of Partnerships? 3
Why Undertake a Public-Private Partnership? 4
Conclusion , 6
Part li Building a Public-Private Partnership: 7
An Action Checklist
Partnership Checklist ' 9
Conclusion 14
Part III Finance, Procurement, and The Service Agreement 15
How to Evaluate Financing Options? 17
Implementing Your Choice: The Process 20
What are the Major Elements of a Service Agreement? 23
Conclusion 26
Conclusion 27
Part IV Appendix - Resources for Assistance on 29
Public-Private Partnerships
Associations/Organizations 32
Publications 34
Case Study Contacts 37
EPA Contacts 38
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Section
Page
List of Exhibits
Exhibit 1 Types of Public-Private Partnerships
Exhibit 2 Characteristics of Public-Private Partnerships
Exhibit 3 Privatization - A Look at State Laws
Exhibit 4 Evaluating Your Financing Options
Exhibit 5 Comparison of Procurement Methods
3
4
13
18
21
Case Studies
Cost Effective Construction
Mt. Vernon, Illinois
Flexible Private Financing
Millbury, Massachusetts
Creative Financing
Scottsdale, Arizona
Regionalization
Downingtown, Pennsylvania
Competitive Negotiation
Kerrville, Texas
Two-Step Advertised Procurement
Western Carolina Sewer Authority
6
11
14
22
23
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Foreword
A from the
Assistant Administrator
This guide is designed to help local officials. Together,
we will find new ways to finance environmental protection.
Concern for the environment has grown in recent years. Never has the demand for environmental protection
been so great We're asked to provide clean and healthy drinking water, secure ways to handle solid waste, and
attain pollution-free waterways. Yet, these activities also require a financial commitment to get the job done.
Over the last two years, I have had the opportunity to meet with many community leaders committed to the
environment. They are very concerned about where the money will come from to build needed facilities and
provide environmental services. At EPA, we recognize the need to develop innovative financing approaches.
We see one solution in what we call public-private partnerships.
Although partnerships can be an effective approach to providing environmental services, the arrangements can be
fairly complex. In talking to local officials around the country, it became clear that there was a need for basic
information on how to put together a deal. This guide is designed to fill that need. In preparing the guide, we
have made an effort to be concise and provide general information on a wide variety of topics. As you pursue the
partnership option, you will need more in-depth information on specific topics. The final section of the guide
provides a list of publications and resources to assist you.
This guide, like the previously-published Public-Private Partnership Case Studies: Profiles of Success, is de-
signed to provide state and local officials with a greater understanding of partnerships and their related issues.
The two books can be used in tandem. While this guide reviews the types of issues every community must
consider in the partnership process, the case studies describe 23 successful examples of how communities have
addressed their situations by establishing partnerships.
We'd like to hear from you your reactions to the guide, your experiences as you explore the partnership
approach, and views on how to improve public-private partnerships in the future. We will feature your ideas in
our quarterly newsletter. In the final part of the guide, you'll find the name and phone number of a lead contact
in your regional EPA office. These people are there to listen, provide support, and help you in any way they can.
Together, we can find innovative ways to assure a clean environment and preserve community well-being. We
think you'll agree that the private sector must become a part of the partnership as well.
Charles L. Grizzle
Assistant Administrator
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Executive Summary
Public-Private Partnerships: What and Why
Building a Public-Private Partnership: An Action Checklist'
Financing, Procurement, and the Service Agreement
As a community leader, you face the prospect of building or upgrading facilities to meet environmental needs.
You already may be feeling the squeeze of growing environmental protection needs and expectations coupled
with decreased funding for infrastructure projects. As the pressure to minimize rate shock for facility users
grows, local community leaders, like yourself, must find new ways for their communities to hold down costs and
build public support for necessary additional expenses. Public-private partnerships offer one solution.
The Self-Help Guide for Local Governments has been written to acquaint local officials with- the concept of
public-private partnerships, their benefits, and the steps a community must take to build relationships with the
private sector. This information will be conveyed in the following sections:
Public-Private Partnerships: What and Why
A public-private partnership is a contractual relationship between a public and private partner that commits both
to providing an environmental service. The private sector can be involved in a variety of ways, from the initial
design of a facility to its daily operation and maintenance.
Although each arrangement is unique, most public-private partnerships fall into one of five categories. These
types are: contract services, turnkey facility, developer financing, privatization and merchant facility. There are
different benefits associated with each of these types.
.Communities enter into partnerships for various reasons. These include: access to more sophisticated technol-
ogy; cost-effective design, construction and/or operation; flexible financing; delegation of responsibility and risk;
and guaranteed cost. '
Building a Public-Private Partnership: An Action Checklist
No two communities build a partnership in exactly the same way, but all must take roughly the same steps. This
document presents an action checklist of these steps that will help a community make many of the decisions
necessary to enter into a contract with a private firm.
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A community initiates the public-private partnership process by evaluating its service needs, reviewing available
technology and identifying resources that may be able to assist in the development of the contract. It is also
important for community leaders to generate public support, while they are evaluating financing prospects and
studying laws and regulations.
Reviewing a potential private partner's track record is also an important part of the process. Another option a
municipality may consider is regionalizing services with surrounding communities. Eventually, local officials
must narrow partnership options, select and conduct its procurement process and finally, develop the service
agreement.
Financing, Procurement, and the Service Agreement
Three of the most difficult steps in building a public-private partnership are financing, procurement, and the
service agreement
In choosing a financing method, a community should estimate the capital required and identify various financing
options. These financing strategies should then be assessed against the financial condition of the municipality,
the project's costs and any risks. The community must select the option which is most appropriate by comparing
benefits and costs.
A local government starts to implement its choice by initiating the procurement process. The three types of
procurement most communities select are advertised procurement, competitive negotiation, and two-step adver-
tising. While advertised procurement allows the community to dictate the terms of the solicitation, competitive
negotiation offers greater flexibility. Two-step advertising is a mixture of the other two.
Finally, a partnership arrangement must be defined in a service agreement. Each contract must include a number
of elements. The contract must define: the project and performance criteria; compensation method and timing;
changing situations and risk allocations; and contract termination and step-in rights. Insurance and bonding
should also be considered, since they may affect the terms of the contract.
IV
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Part I
Public-Private Partnerships:
What and Why
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Part I
Public-Private Partnerships!
What and Why
What is a Public-Private Partnership?
What Types of Activities Do the Partners Perform?
What are the Different Types of Partnerships?
Why Undertake a Public-Private Partnership?
Part I addresses the fundamentals of public-private
partnerships. It introduces you to the concepts, terms,
and benefits of working with the private sector.
What is a Public-Private Partnership?
A public-private partnership is a contractual relation-
ship between a locality and a private company that
commits both parties to providing an environmental
service.
What Types of Activities do the
Partners Perform?
The partnership approach means sharing responsibility
and risk for any one of the following activities:
Deciding to provide an environmental service in a
community;
Financing trie project using public and/or private
funds;
Designing and/or constructing the facility; and
B Operating and maintaining (O & M) the facility or
service.
What are the Different: Types of
Partnerships?
Within this broad definition, each public-private
partnership is unique, with transactions designed to
meet particular needs of different communities.
Despite these differences, five types of partnership
arrangements are generally recognized. They are listed
in Exhibit 1.
Exhibit 1
Types of Public-Private Partnerships
Least Private Involvement
Contract Services
Turnkey Facility
Developer Financing
Privatization
Merchant Facility
Most Private Involvement
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Contract Services: The private sector is contracted
to provide a specific municipal service, such as
garbage collection, or to maintain and operate a
facility such as a waste treatment plant. The facility is
owned by the public sector.
Turnkey Facility: The private sector designs, con-
structs, and operates an environmental facility that is
owned by the public sector. While the public sector
generally assumes the financing risk, the performance
risk for minimum levels of service and/or compliance
usually is assumed by the private partner.
Developer Financing: In this type of arrangement,
the private sector (usually private developers) finances
the construction or expansion of an environmental
facility in return for the right to build houses, stores or
industrial facilities.
Privatization: In privatization, the private sector
owns, builds and operates a facility. They also
partially or totally finance the facility.
Merchant Facility: In this type of arrangement, not
only does the private sector own and operate the
facility, as in privatization deals, but they also make
the decision to provide an environmental service to a
community. It is similar in concept to a fast food
franchise except that it involves environmental
services.
The five types of public-private partnerships can be
characterized by the roles played by both public and
private partners. Exhibit 2 illustrates these roles as
they relate to partnership activities.
Why Undertake a Public-Private
Partnership?
There are five basic reasons for you to enter into a
public-private partnership:
Access to more sophisticated technology;
Cost-effective design, construction and/or opera-
tion;
Flexible financing, including the use of private
capital;
Delegation of responsibility and risk; and
Guaranteed cost.
Exhibit 2
Characteristics of Public-Private Partnerships
Decision to Provide Services
Design
Financing
Construction
Ownership
Operation & Maintenance
Contract
Services
Public
Public
Public
Public '
Public
Private
Turnkey
Facility
Public
Private
Public
Private
Public
Private
Developer
Financing
Public
Either
Private
Either
Either
Either
Privatization
Public
Private
Private
Private
Private
Private
Merchant
Facility
Private
Private
Private
Private
Private
Private
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Cost Effective Construction:
Mt. Vernon, Illinois
Facing high costs of traditional wastewater treat-
ment and pressure to develop new capacity for at-
tracting industrial development, the Mayor of Mt.
Vernon, Illinois, sought assistance from a local pri-
vate firm. The company designed, built, and now op-
erates an upgraded and expanded wastewatertreat-
ment plant forthe city. The facility was operating two
years prior to estimates for the public alternative at a
40 percent cost savings. The timeliness of the
project also was extremely important since Mt. Ver-
non needed to increase its capacity quickly in order
to attract and accommodate a new automobile fac-
tory. Because of private participation, Mt Vernon
was able to secure the factory and now benefits from
the jobs and tax revenue the plant generates.
More Sophisticated Technology
Private partners often have greater technical and
design expertise that enables them to assess opportuni-
ties for using more advanced technologies and make
knowledgeable predictions of cost and performance
benefits. For this reason, they may be more willing to
undertake the risk of new technologies. It may be
harder for you, as a local official more directly influ-
enced by political pressures, to take these risks.
Cost-Effective Design, Construction and/or
Operation: Cost Savings
A public-private partnership arrangement can lead to
cost savings in several ways. First, since a private
partner often operates similar facilities within the
same geographical area, costs for operation and
maintenance can be reduced, because the private
partner can buy supplies in bulk and centralize ad-
ministration. In many cases, the private partner also
has a larger pool of employees. This allows the
private partner to perform a greater number of repairs
and .maintenance procedures by moving highly trained
staff from site to site. The results is cost savings
through reduced labor and repair costs.
Turnkey arrangements provide communities with a
second option for saving money. By consolidating
responsibility for designing, constructing and operat-
ing a facility into one contractual agreement rather
than two or three, many of the delays associated with
the procurement process can be avoided. As a result,
you can reduce interest costs and achieve compliance
goals more quickly. Your community's costs also are
more predictable when one private partner is respon-
sible for all phases of construction and operation.
Finally, public-private arrangements that increase, the
use of the facility or serve a larger population may
also offer cost savings. For example, facilities that
make money from the sale of by-products or serve
more than one jurisdiction may result in savings to the
public partner.
Flexible Financing
Some partnerships, such as developer financing, bring
private funding to public facilities. In developer
financing, a private developer may contribute the
initial capital and operate the leased facility under the
city's overview. The developer contributes funds in
exchange for rights to use the new facility and/or
receive future income from user fees. The advantages
of these arrangements, such as the sale of sewer and
water access rights, is the contribution to capital by
the developer and new residents who need the in-
creased capacity and a corresponding shift in burden
away from users already in the system. The weakness
in developer financing as well as other types of private
investment financing is that the public sector takes the
risk of the developer possibly withdrawing or altering
development decisions.
Other financing arrangements such as contract ser-
vices offer limited private funding. Privatization and
merchant facilities generally rely on private funding to
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a great extent, eliminating the need to encumber local
government debt ceilings or scheduling of referen-
dums. Depending on the project, tax-exempt financing
may be feasible, and the private partner may be
willing to undertake a longer amortization term
(reducing annual costs) than the public sector can.
Delegation of Responsibility and Risk
You may not want the day-to-day burden of managing
technologically complex facilities, lack the contacts
and experience to raise capital through the bond
markets, or wish to avoid managing a complex pro-
curement process. If so, the partnership approach
offers a means to carry out your responsibilities
without making you manage the service.
The risks involved in providing environmental ser-
vices can make or break an investment decision. Risks
Flexible Private Financing
Millbury, Massachusetts
In 1985, the Town of Millbury, Massachusetts, was
under a state order to close its landfill. A feasibility
study showed that the town could not afford a new fa-
cility. Instead, they accepted a vendor's proposal to
build and operate a privately-owned waste-to-energy
merchant facility. The town allowed the facility to
locate within its boundaries, leased land to the ven-
dor, and is enjoying free tipping for 20 years for most
solid wastes. In addition, Millbury benefits from a
"host community fee" for waste bought from other
communities. The town receives approximately
$30,000 to $40,000 per month from the 33 other
communities using the facility.
include design and construction delays, plant per-
formance and environmental compliance, financial
liabilities, tax liability, labor stability, and long-term
demand for services. In the continuum from tradi-
tional public service delivery to full private delivery,
these risks shift from public to private sectors.
In developing a partnership arrangement you can
transfer certain risks to, and elicit guarantees from,
the private sector. However, the private sector, if
willing to assume those risks, may adjust its prices
accordingly.
Guaranteed Cost
A public-private partnership provides certain bene-
fits to a community through guaranteed costs. A
guaranteed cost permits the community to accurately
budget for an environmental service over a set period
of time. This simplifies the budget process since the
community will no longer need to make adjustments
to provide for contingencies during the budget year.
Conclusion
Public-private partnerships can offer real benefits to
some communities. Find out whether your commu-
nity could benefit from a partnership by conducting
an assessment of the partnership approach in terms
of your specific needs. This assessment is the topic
of Part II.
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Part II
Building a Public-Private Partnerships
An Action Checklist
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Part
Building a Public-Private Partnership;
An Action Checklist
Partnership Checklist
Evaluate Service Needs
Review Available Technologies
Identify Expert Resources
Evaluate Financing Prospects
Identify Community Resources and Generate Support
Study Laws and Regulations
Evaluate Business Interest and Track Record
Consider Regional Options
Narrow Partnership Types
Select and Conduct Procurement Process
Develop Service Agreement
Although no two communities build a partnership in
exactly the same way, each roughly follows the same
steps. You will take many of these steps to build your
facility, regardless of whether or not a partnership is
being considered. These steps may come in any
sequence and may coincide with one another. The
sequence listed here is typical, but you can customize
it to meet your needs.
/ Evaluate Service Needs
Any community considering a public-private partner-
ship should first determine its needs, based on an
assessment of current, short and long-term require-
ments. If you have not already done so, you might
want to obtain outside expertise to assist you with this
planning process. Several of the associations and
information sources listed in Part IV of this document
may be able to help you.
J Review Available Technologies
You probably have a reasonably clear idea of the
types of technologies available to meet your
community's needs. An evaluation of the advantages
and disadvantages of each may help you select those
which will be most appropriate. For example, some
facilities may be less costly to construct, but more
expensive to operate over the long term. Some may
not yet be proven over time, which increases the
incentive to share risk with the private sector. A
partnership may create new options for you to con-
9
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sider. The private sector can be, in many cases, more
experienced using sophisticated machinery, and can
often make better use of emerging technologies.
In fact, you could take advantage of private participa-
tion by giving the private sector a role in the technol-
ogy review. This can be done by specifying the
project objective while leaving the choice of technol-
ogy open for your private partner. This is particularly
effective if you expect strong performance guarantees
from your private partner. For further information on
technologies, see Part IV of this guide.
/ Identify Expert Resources
You may need assistance from other professionals to
form and manage a partnership. Because you will rely
on them at an early stage, you need to determine the
cost of the service in advance.
Three areas in which you may need assistance are:
Planning the project, including analysis of regula-
tory requirements, capabilities of the current
system, needed improvements, and available
technologies; and determining whether the part-
nership and the proposal are legally permissible.
Evaluating financial options, including prevailing
market conditions, amortization and structural
options, security and credit aspects, and the tax
consequences of different partnership arrange-
ments.
Evaluating private proposals for their ability to
meet your needs, the private partner's qualifica-
tions, the degree of control to be retained by the
community, the sharing of risk, and the desirabil-
ity of particular provisions.
Sources of expertise range from voluntarily provided
information to professional services. They may
include your peers in other communities, as well as
people in state agencies, universities, federal agencies,
and professional and trade associations. For a list of
sources on this subject, see Part IV of this guide.
, Expert Resources
Technical Advisor - helps assemble project specifica-
tions; may assist procurement and solicitation
processes; may oversee construction.
Financial Advisor - recommends and helps evaluate
financial options; helps structure and obtain
financing.
Investment Banker - underwrites financing; may
provide financial advisory services.
Bond Counsel - assures that financing complies with
state/federal regulations; may assist in procure-
ment.
Legal Counsel - prepares and assists in negotiating
O&M or service agreement.
/" Evaluate Financing Prospects
You will have to identify available financing alterna-
tives. Once this is done, you and your advisors will
conduct a study to compare the costs of the partner-
ship approach to other available financing methods.
Part III explores how to evaluate the financing terms
in greater detail.
i/ Identify Community Resources
and Generate Support
Successful partnerships usually have a local champion
- someone who keeps the process moving and the key
players involved. This can be the mayor, city/town
manager, finance officer or public works director.
The type of partnership helps determine who will take
the lead at different times. To contract out operation
and maintenance, for example, the public works
director will probably have a central role throughout
the process, with early input from elected officials (if
authorization is necessary) and legal counsel during
procurement and service contract negotiation. In
contrast, to complete a turnkey program, the finance
director and investment banker also will play key
roles, especially during the financing process.
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Creative Financing:
Scottsdale, Arizona
A drinking water project in Scottsdale, Arizona, in
late 1985, demonstrates how one city selected its
financing method. Initially, the private developer
expected to use industrial development bonds (I DB)
to finance the project. However, as planning pro-
gressed, I DBs were not available. After careful
review and analysis by the city and its bond counsel,
a local economic development authority issued
revenue bonds secured by revenues from the devel-
oper and further supported by the full faith and credit
of the city.
Four Steps
to Generate Public Support
for a Public-Private Partnership
Form a citizens' committee to help
oversee the partnership process and
express community concerns.
Use the media to build a positive
image of your private partner.
Offer job guarantees to current public
employees.
Share profits with the host community.
Internal Resources
Local Elected Officials - may have to authorize
partnership, usually approves method of financ-
ing.
Public Works Director - evaluates and approves type
of environmental system, generally involved in
selection of private partner.
Chief Executive Officer (Mayor, Town Manager,
Township Trustees) - may participate in selection
of private partner, may have ultimate decision-
making authority; may interact with state, county,
or investment banker, if mere is one.
Finance Director - evaluates and recommends
method of financing; may handle procurement;
works with private partners and investment banker
to complete financing.
Legal Counsel - assists the procurement; may work
with legislature on authorization; reviews financ-
ing for legal compliance, and negotiates agree-
ments.
Your community at large should also be involved at
an early stage. Communication with the public and
the media will help your community understand the
benefits of a public-private partnerships while curbing
any resistance. "Citizen support and interest can often
change or improve the terms of the partnership. For
instance, you could activate the public by forming a
citizens' task force to site the facility.
It is also crucial to obtain a clear-eyed view of the
political situation at the outset. If the community
expresses concern over a private company owning a
vital public facility, for example, privatization and
merchant facilities may not be realistic options for you
to consider.
If your municipality has employees, you may want to
take steps to ensure that their jobs or benefits will not
be taken away. Some private partners, for example,
have provided job guarantees to overcome this prob-
lem. Other communities have had success using
special placement programs for dislocated workers.
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Study Laws and Regulations
State Laws
You should consider federal and state laws and
regulations when making your decisions. You may
need to hire a lawyer to assist you in this review. At
the federal level, your lawyer should review environ-
mental compliance requirements and responsibilities.
Being familiar with compliance standards may help
you make better long-term decisions concerning your
facility.
In addition, you and your lawyer should consider the
tax laws which may affect the financing of your
project Another area which warrants your attention if
you are planning a wastewater treatment facility is the
revolving loan program within your state. Finally, take
a look at the conditions associated with any state or
federal grants used to construct existing facilities.
These conditions may affect the way you finance
renovations and modifications to these facilities.
State laws, regulations, and programs also are impor-
tant. They influence:
How and by whom public services are delivered;
The structure of partnerships;
How advisory and technical services are obtained;
How partnerships are financed;
Limits on charging for services;
Funding program requirements;
Environmental compliance requirements; and
What procurement laws and bidding procedures
must be used.
In addition to regulating how you enter into business
agreements, some state laws regulate private compa-
nies through public utility commissions. Others
exempt private partners from utility regulation in
specific fields, such as the operation of wastewater
treatment facilities. In these cases, the private partner
promises non-discrimination among users and compli-
ance with health and safety requirements, in exchange
for freedom from public utility restrictions.
In recent years, as states have realized the benefits of
the partnership approach, many have adapted their
laws accordingly. As of 1986, 19 states, including
many of those with large population concentrations,
have passed comprehensive privatization statutes (see
Exhibit 3). These laws generally make it easier for
communities to enter into public-private partnerships.
Among these statutes are provisions that:
Allow local governments to enter into long-term
service contracts with private firms;
Streamline the procurement process and permit
negotiated contracts;
Provide exemptions from local taxes or licensing
and recording fees;
Provide authorization to enter into take-or-pay
agreements;
Grant powers for the creation of special authori-
ties to issue debt secured by project revenue or
enter into lease and sell agreements;
Authorize private parties to collect service
charges; and
Create private investment tax credits.
J Evaluate Business Interest and
Track Record
Before investing a lot of time and money, you should
weigh private sector interest in your project. You can
generate interest through pre-solicitation activities to
publicize their needs for environmental services and
alert vendors to future opportunities. Frequently, the
release of draft specifications or solicitations will
obtain the necessary visibility and publicity. Expres-
sions of interest in certain types of partnerships may
result in constructive suggestions from the private
sector about how you should proceed and narrow your
partnership choices.
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Exhibit 3
Privatization
A Look at State Laws
No Laws Favoring Partnerships
Laws Favoring Partnerships
Source: EPA's Public-Private Partnerships for Environmental Services: Anatomy, Incentives and Impediments
Many communities avoid delays later in the project by
evaluating prospective partners' financial and per-
formance standings at the beginning. One way is to
examine your partner's recent track record. Another
is to review your partner's balance sheet. At a mini-
mum, you should carefully check both bank and client
references.
You also should consider your prospective partner's
record in terms of environmental compliance. Contact
the private company's other clients, particularly those
in the public sector, to determine its ability to meet
environmental standards. In addition, try to evaluate
whether the facility will accommodate your require-
ments not only now but also in the future
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In addition to reducing operating costs, governments ,
that participate in regionalized facilities share the risks
associated with financing. Governments can also use
combined expertise to monitor the project and negoti-.
ate with private partners.
Regional arrangements can attract private partners. In
evaluating the viability of owning and operating a
facility, the private partner may determine that the
only feasible alternative is to service more than one
community. For more information on regionalization,
please refer to Part IV of this guide.
Regionalization:
Downingtown, Pennsylvania
The Borough of Downingtown, Pennsylvania, owned
a wastewatertreatment plant that needed upgrading
and expansion. The borough was surrounded by
several younger, growing communities that created
increasing pressures for additional facilities. To avoid
political friction and facilitate area-wide growth in an
orderly fashion, the borough and townships agreed
to form a new authority with the power to enter into a
public-private partnership.
/ Narrow Partnership Types
Your review of the previous steps may have elimi-
nated some partnership types. For example, if your
community requires financing assistance, contract
operation and maintenance will not help. If your state
law restricts impact fees, some types of developer
financing may not be available. If private vendors are
not interested, privatization is not an option. Once
you have weeded out the unlikely and the impossible,
the realistic partnership options remain.
/ Select and Conduct Procurement
Process
Different states impose different procurement require-
ments on local governments. The procurement steps
in selecting a private partner will be easier if you can
use a flexible procurement process. Part III of this
guide explores three different types of procurement
processes in greater detail.
S Develop Service Agreement
The service contract is a legal agreement between you
and the private partner to provide the service in
question. The agreement should be designed to
protect the interests of both by including representa-
tion and guarantees, risk allocations, business terms
and conditions for each party. Part III of this guide
also provides information on the issues to be covered
in a service agreement.
Conclusion
The process of exploring a partnership with the private
'Sector involves many of the same steps that you must
tatke regardless of who owns, finances, or operates
your facility. It is an orderly process with well-
Idgfined analyses of needs, available technologies,
human resources, legal requirements, and procurement
options. Yet, involving a private partner may also
require special skills and experience that you do not
'have. While there is no substitute for expert advice,
, the next part ofMsgmd^ reviews in more detail three
c-f the niostimportant steps m forming public-private
igartrierships: financing, procurement, and the service
agreement.
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Part III
Financings, Procurement,
The Service Agreement
15
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16
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Part Iff
Financing, Procurement, and
The Service Agreement
How to Evaluate Financing Options?
Implementing Your Choice: The Process
What are the Major Elements of a Service Agreement?
Most of the steps outlined in the previous section are
relatively straightforward. Three of the steps, how-
ever, are more complicated. They may require you to
follow different procedures when a public-private
partnership is involved (as opposed to a purely public
transaction). This section provides more detailed
information on these three steps -financing, procure-
ment, and drafting a service agreement.
How to Evaluate Financing Options?
To determine if a public-private partnership makes
sense and meets your government's needs, you should
evaluate available financing options and their feasibil-
ity. If you don't know which financing option best
suits your needs, you may need to obtain outside
assistance. For sources of information on financing
options, see Part IV of this guide. The steps that you
and your advisors can follow are outlined in Exhibit 4.
The steps are broad and may apply to one or more
types of public-private partnerships. Likewise, they
also apply to traditional publicly owned and financed
environmental facilities. This section discusses key
steps in more detail.
Estimate Capital Required
\
Even though you know your community needs a new
or improved environmental facility, you should not
choose a partnership until you have an idea of how
much it will cost. At this early state, rough cost
estimates are adequate. As the project progresses, you
must refine your figures to reflect more accurate costs.
Identify Financing Options
There are many ways to finance a public-private
partnership. Many partnership arrangements include
more than one method of financing. Since financing
is greatly influenced by those who own the facility,
the discussion of financing options is divided into
those associated with public and private ownership.
Public ownership - Local governments might use one
or all of the following financing arrangements:
Direct cash payment from private parties - Selling the
rights for future environmental services as part of
a developer financing program is one example of
a direct payment.
Grants, loans and loan guarantees from the federal
or state governments - These could include
federally funded grants for wastewater treatment
: and state revolving funds.
General obligation bonds (G.O.) - Probably the best-
17
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Exhibit 4
Evaluating Your Financing Options
Estimate Capital Required
Identify Financing Options
Assess Financing Arrangements
9 Evaluate Financial Condition
Finance Project Cost
Allocate Risks
Compare Financing Options
1
Make a Decision
known type of public borrowing, a G.O. bond is
backed by a government's full taxing authority.
Revenue bonds - Revenue bonds are secured by the
revenue generated by the facility being financed.
None of the taxing authority of the government is
involved.
Tax-exempt leases - Tax-exempt leases are not
considered debt in most states; therefore, restric-
tions on the issuance of debt (bond referenda, debt
ceilings, etc.) do not apply. The lease is secured,
by a government's annual promise to pay; no
revenues or taxing authority are pledged.
Private contributions - In some instances, developers
will build a facility and donate it to the govern-
ment or contribute funds for its construction.
Private ownership - If public ownership is not desired
or required, private ownership options such as privati-
zation or merchant facilities may provide an alterna-
tive. Financing methods associated with private
ownership include:
Direct cash payment from public partners - Public
partners may make direct contributions in the
form of staff and consultants during negotiations
for privately owned facilities.
Grants, loans and loan guarantees from state
governments - Some state programs, such as re-
volving loan programs for wastewater treatment
facilities, assist private partners.
Private-Activity Bonds - These tax-exempt bonds,
including industrial development bonds (IDBs),
are issued to private persons or corporations but
are subject to a number of restrictions to ensure
the public-purpose nature of their use. Because of
these limitations, some private partners use
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taxable industrial bonds to finance all or part of
their participation.
Self-Supporting - These cash investments are usually
based upon return on equity expectations in the
form of both revenue flows and tax benefits as
well as negotiation. The inclusion of private
equity in a project requires careful structuring in
order to comply with federal tax law provisions.
Assess Financing Arrangements
A financial feasibility study will help you evaluate
whether your government can afford a project. The
study will:
Evaluate your government's present financial
dition; and
con-
Use cash flow analysis to estimate the proposed
project's impact on the community's future
financial condition.
Because of the complexity and the variety of decisions
that must be made, many governments create internal
committees and/or hire consultants to conduct the
feasibility studies and make final recommendations.
Among the types of consultants to call on are:
Financial advisors (either independent firms or
advisors affiliated with investment or commercial
banks);
Bond counsel that can provide input relative to
legally acceptable financing structures;
Engineering consultants who have financial
analysis capabilities;
Accounting firms (both their consulting and audit
staffs);
Other providers of technical assistance such as
colleges, universities, or national and state asso-
ciations of municipal officials; and
Environmental engineers and lawyers from state
or federal government.
While hiring consultants may mean more costs, some
governments find that private firms will conduct
substantial portions of their analyses free of charge to
secure a significant role in the project, such as provid-
ing the financing.
Evaluate Financial Condition
As part of the feasibility study you will measure the
financial condition of your community and the finan-
cial burden the proposed project places on households.
Many communities evaluate their credit capacity to
take on a major capital project by examining finance
indicators such as:
The real property tax collection rate;
Overall outstanding debt in proportion to various
growth characteristics; and
Annual population changes.
Finance Project Costs
Another part of the study is a review of the project
costs. It includes design and construction costs as
well as other factors for each financing approach.
Typically, such a review incorporates the effects of
different technical and economic conditions on your
community's future financial position.
You may want to consider at least two scenarios for
each financing option - best and worst cases. Each
uses assumptions for financing costs, projected
revenues, and the time involved for construction.
Allocate Risks
Another important aspect of the evaluation is the risk
analysis. This is, in itself, a problem as local govern-
ment does not routinely assess risks when planning
capital intensive projects. Local governments must
remember that municipal ownership means assuming
all the risks involved in development, finance and
ownership. Under a public-private partnership, risks
can be allocated to the private sector. This additional
benefit of risk avoidance must be addressed by local
government when evaluating options.
Compare Financing Options
Although communities frequently seek the lowest cost
alternative, they may have other reasons for selecting
one type of financing over another. For instance:
You need voter approval to sell general obligation
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bonds, which may be difficult to obtain or take too
long;
Your government has too much debt outstanding
(as defined by state-imposed debt ceilings or by
bond market acceptance) and either cannot sell
bonds or interest on the bonds would be too high;
and
Federal restrictions on the facility's ownership
and use jeopardize a bond's tax-exempt status.
Make a Decision
Having followed the preceding steps, you and other
community leaders have the information you need to
make an infoimed decision. However, the final
decision should not be made until the money essential
to your project and the technical issues also have been
addressed. You may find the process so dynamic that
the results of your analyses change frequently. By
delaying the final financing decision until funds are
necessary, you maintain maximum flexibility.
As this discussion demonstrates, you may be faced
with a multitude of financing decisions before you
select the approach that meets your objectives. The
proposals for consideration may provide a number of
different financing and ownership options. We will
now review spme of the things you may want to
consider regarding the selection of your private
partner.
Implementing Your Choice:
The Process ,
First, you have to decide how to decide. The process
you use to implement your decision and select your
partner is one of the most important decisions you will
make. You might want to use the American Bar
Association's (ABA) Model Procurement Code,
which gives you guidelines for revising your
government's codes and ordinances to make it easier
to find a suitable partner. To obtain a copy of the
ABA code, contact:
American Bar Association
Model Procurement Code
750 North Lakeshore Drive
Chicago, IL 60611
(312)988-5555
To initiate your selection, you will engage in a solici-
tation process to let potential partners know you are
looking for help. Most communities use one of three
fairly well-defined methods to accomplish this:
Solicit for competitive, sealed bids from potential
partners through advertisements and then select a
vendor based on the lowest price and ability to
meet specified performance requirements;
Issue a request for proposal (RFP) to potential
partners, and then negotiate for the most advanta-
geous deal; or
Use a two-step process which requires selection
first on the basis of the technical merits, and sub-
sequently on the basis of. lowest bid (Exhibit 5
summarizes the advantages and disadvantages of
each process).
Advertised Procurement
Competitive, sealed bidding, known as advertised
procurement, makes it relatively easy for you to
evaluate bids and select a winner based on the lowest
price. The first step is to issue an Invitation for Bid
(IFB).
In your IFB, you should describe all
specifications including:
- Technological approach
- Quantity and quality of goods and services
- Delivery dates, and place and method of
delivery
- Insurance and bonding requirements
- Subcontractor management
Responsibility for financing
Responsibility for obtaining and complying
with permits
- Length of the contract
Inspections and audit requirements
Warranties
- Service agreement terms and conditions
- Risk allocation and remedies
Once bids are received, they are evaluated, in terms of
their responsiveness to the IFB and whether the bidder
is capable of doing the job. Once unacceptable bids
are weeded out, the contract is awarded to the lowest
bidder.
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Exhibits
Comparison of Procurement Methods
Simplicity
Speed
Flexibility
Administrative Ease
Specifications: Easy to Draft
Free from Protests
Expense
Advertised
'
>
O
Š
O
O
O
Competitive Negotiation
O
O
O
Two-Step
Ž :
Ģ
w
Ģ
Ģ
e
V
Most Desirable
Average
O
Least Desirable
It should be noted that as the degree of private sector
involvement increases, it becomes more difficult to
structure sealed bid procurement. Intensive private
sector participation necessitates the negotiation of key
terms and conditions, particularly regarding financing
and risk aspects. Sealed bid requirements preclude
negotiations. Other conditions, such as the timing of
implementation and prevailing financial market
conditions will affect bid pricing. It may be difficult
for bidders to specify these without qualifications.
Competitive Negotiation
Before deciding on a competitive negotiation process,
you must know whether your community has the legal
authority to engage in it. If your community has a
procurement system based on the American Bar
Association's Model Procurement Code or Ordinance,
it usually has this authority unless the planned transac-
tion is specifically excluded.
Requests for Proposals. Competitive negotiation
begins when a Request for Proposal (REP) is publi-
cized and issued as required by state or local law. To
maximize competition and to minimize obstacles,
many governments circulate a draft RFP to potential
proposers and invite them to point out items that
should be clarified, deleted or added.
Receive Offers. Your RFP should define in general
terms the goods or services being sought, the evalu-
ation criteria and their relative importance, as well as
provisions, such as insurance, that will be required.
Offerers are required to submit proposals by a stated
closing date. The proposals will usually consist of a
technical proposal containing the offerer's approach to
the work and a description of the technology, resumes
of key personnel, qualifications based on previous
experience in the area, and a business/cost proposal
containing the offerer's prices and organizational
structure.
Evaluate Offers. After you receive initial offers,
review the proposals and rank them in accordance
with the stated evaluation criteria. Many governments
develop an evaluation checklist and score proposals
on how well they address .certain key issues.
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Competitive Negotiation:
Kerrville, Texas
The City of Kerrville, Texas needed to expand and
upgrade its wastewater treatment works but was
unsure of the available technological and financial
alternatives. Kerrville hired an independent advisor
to structure the procurement process to attract a wide
array of technical and financial approaches. The city
entertained offers using competitive negotiation that
allowed it to compare the costs of using general
obligation bonds, revenue bonds, leasing and full
privatization. Ultimately, Kerrville selected an inno-
vative technology and chose to finance the project
using revenue bonds because the technological
savings were sufficiently high for the city to request a
conservative financial plan.
Negotiate with Offerors. Once proposals are evalu-
ated, and the competitive range established, negotia-
tions are conducted with one or more offerers within
the competitive range, and a date is set for the submis-
sion of best and final offers.
Award Contract. If, after these discussions, you
change the RFP to use a particularly innovative
approach, you will probably have to reissue it and call
for new proposals that serve as best and final offers.
Bidders are then free to alter their own approaches
consistent with your new statement of work. Contract
award need not be made to the lowest priced bid.
Instead, it is made to the offerer who submits the best
overall proposal as measured by the evaluation
criteria.
Two-Step Advertising
Request for Technical Proposals. The two-step
process begins with the issuance of a Request for
Technical Proposals (RFTP). Like an Invitation for
Bid or Request for Proposals, the RFTP should be
broadly publicized. This process calls for technical
proposals to be submitted first, without pricing
information, so that initial evaluation is based solely
on technical merits. As with the other approaches,
your RFTP must contain criteria that indicate how
proposals will be evaluated. Your RFTP should also
include technical and performance terms and condi-
tions (including guarantees) and the technical/manage-
rial/operational qualifications of the offerers.
Evaluate Proposals. When proposals are received,
the first step is to eliminate all unacceptable proposals.
However, if as a result of this initial elimination
process, you find that you have too few competitors,
you can try to qualify those firms eliminated in the
first round by seeking additional information. In the
second step, a formal DFB is issued to competitors who
have submitted acceptable technical proposals. Each
bidder can bid only on the technical approach found
acceptable under the first step. The lowest bidder is
the winner.
Comparing the Approaches
Advertised Procurement. In advertised procurement,
the community must prepare a very specific invitation
for bid and the bidders cannot alter or amend its
material terms. Therefore, this type of procurement
works best when a community knows precisely what it
wants to buy and how the project is to be financed.
Competitive Negotiation. Competitive negotiation is
a more flexible process, allowing you to be less
specific about the project and its financing. It offers
the opportunity to define your needs generally (i.e., to
identify performance needs rather than a particular
technical or financial approach). Technical and
financial needs are defined to allow for the maximum
number of practical approaches as long as they meet
your minimum needs. It also presents the opportunity
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to negotiate with one or more offerers at the competi-
tive range. One advantage of this process is that you
can learn about new and attractive technological or
financing approaches during your discussions.
Two-Step Advertising. Two-step advertising procure-
ment is really a mixture of the other two processes.
Since it provides more flexibility than advertised
procurement, it can be used to obtain flexibility when
competitive negotiation is not permitted.
What are the Major Elements of a
Service Agreement?
Checklist of
General Contract Provisions
Contract Term
Project Description and Performance
Criteria
Compensation Method & Timing
Changing Situations and Risk
Allocation
Contract Termination and Step-in
Rights
Insurance and Bonding
Even though each community's projects are unique,
there are a number of common contractual issues to
consider before going forward with the procurement
process. This section summarizes common issues and
flags key considerations of each.
/ Contract Term
Virtually every pricing decision and many tax conse-
quences hinge on the term of the basic partnership
contract. State and local law may restrict the
community's flexibility and, therefore, counsel should
be consulted before a community commits to multi-
year contracting;
Two-Step
Advertised Procurement:
Western Carolina
Sewer Authority
The Western Carolina Sewer Authority wanted to
conduct acompetitive procurement forthe const ruc-
tion and operation of a new wastewater treatment
facility. South Carolina law did not allow competitive
negotiation, and the Authority was hesitant to use the
sealed bidding process for such a sophisticated
project. Instead, the Authority used the two-step
advertised bidding method and conducted sufficient
technical discussions with the offerers to overcome
the inherent limitations of the sealed bidding proc-
ess.
Single-year contracting yields the highest degree of
price flexibility and ability to adjust performance
criteria and standards. However, single-year contract-
ing also has limitations:
Procurement costs are incurred annually;
Initial or start-up costs may be amortized only
over one year, and
Private sector interest is substantially reduced
because tax-driven service and lease-purchase
contracts work poorly in this environment.
Short duration contracts are most appropriate when
you expect a lot of bidders; when they won't need to
put up a lot of money, and when the job is relatively
simple.
In contrast, multi-year contracts are more suitable
where service continuity is desired and all costs can be
amortized over a longer time period. Financing
institutions find longer-term contracts more attractive
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than shorter contracts because of the certainty of the
long-term cash flow.
S Protect Description and
Performance Criteria
A community is best advised to establish clear stan-
dards of performance hi a "Statement of Work,"
which should be part of each contract you write. The
standards should address such basic matters as quality
of performance, quantity of goods and services to be
finished, and delivery/performance dates or mile-
stones. In addition, specific performance standards
should be tailored to ensure that the community and
contractor agree at the outset about who is to do what
for how much.
Contracts are frequently structured using incentive and
penalty provisions. Typically, they cover:
On-time performance;
Quality of performance;
Safety;
Cost control;
Community relations; and
Compliance.
For example, where a contract is appropriately struc-
tured, a contractor that meets an established perform-
ance criterion is entitled to an incentive fee and may
be entitled to an additional award fee.
Conversely, if performance falls below an established
criterion, a penalty or liquidated damaged provision
may apply. You should avoid drafting solicitations
that contain excessive penalties because contractors
will add contingency pricing to their bids or offers,
resulting in higher prices to the community that may
be unnecessary if the contingent event never occurs.
/* Compensation Method and Timing
The basic formula for contractor payment may be
established either in the solicitation documents or
during the negotiation process. Typically, payment
categories include certain initial costs such as con-
struction, initial capitalization, start-up costs and costs
for actual operations.
Initial Costs
Initial costs vary, depending on the nature of the
project, but generally include hiring and training
personnel, inspecting new equipment, installing
necessary support equipment including utilities,
marketing activities to draw a customer base if
appropriate, purchasing and installing major equip-
ment, constructing the facility and testing the system..
These initial payments may be made in a lump sum,
on a calendar basis (e.g., monthly), by milestones or
tasks or through periodic service payments amortized
over the life of the agreement.
Payments for operations or services are typically
structured three ways:
Fixed price for a specific term;
Cost-plus-fixed-fee; and
Fixed unit price.
A fixed price contract is appropriate when the service
is stable and changes are unlikely to occur. If the
contract term exceeds one year, the contractor is
exposed to substantial risk in forecasting prices.
Therefore, contractors tend to add a contingency to
their prices. To protect against such padding, commu-
nities should include an economic price adjustment
clause into the contract aligned with an appropriate
cost index. Typically, costs for fuel, certain materials
or chemicals, and insurance are the most volatile and
are best passed through for direct payment by commu-
nities. This will encourage contractors to contain
costs even in times of extreme price fluctuations.
If you plan to install a new or unproven technology,
you should consider a cost-plus-fixed-fee contract
type. This method calls for a fixed monthly fee to be
paid to the contractor with all other costs handled by
the community directly or as pass-throughs. Because
this contract method places little pressure on the
contractor to control costs, it is advisable to place a
cap on overall costs. Contractors usually favor this
type of contract because it eliminates most risks even
though potential profits are kept to a lower, guaran-
teed level. -
Fixed price unit contracting is a third type of contract
payment. This method ties compensation to variable
24
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units of performance and establishes a certain mini-
mum level of service. In a service agreement for solid
waste disposal, for example, as long as the public
partner delivers garbage within a range of expected
volumes each day, the private partner receives a fixed
price per ton. If delivery is above or below that
volume prices will be adjusted to account for changes
in the private partner's cost Ranges in price and
performance can be established either in the solicita-
tion or during negotiation. Some governments,
particularly those engaging in source reduction
programs, will not want to engage in contracts requir-
ing minimum volume levels.
Although many cities prefer this approach, it requires
more sophisticated contract administration. However,
it offers better protection to both parties and allows for
easier adjustments compared to fixed prices.
/" Changing Situations and Risk
Allocations
One key decision is how the parties in the partnership
will handle changes during financing, construction, or
operation. The partnership agreement should address
at least the following kinds of changes:
Changes in tax law, either before or after closing
on the project financing;
Increased construction costs;
Resolution of conditions which reasonably cannot
be anticipated nor controlled;
Differing site conditions;
Increased operation and maintenance costs;
Increased costs due to a change in the character,
strength or volume of the waste stream being
treated;
. Warranty obligations not originally contemplated;
Changes in environmental compliance require-
ments; and
Changes in ownership.
Although the allocation of these and similar risks may
be included in the solicitations, the parties may decide
during negotiation to allocate the risks differently than
originally anticipated. This will generally be permis-
sible if the solicitation clearly states that such a
negotiation may occur.
One of the community's main benefits from public-
private partnerships is that most of the risk for satis-
factory performance can be shifted to the private
partner (i.e., the private partner holds the permits).
This means, for example, that the private partner must
determine what existing and new laws and regulations
must be met Thus, the community can hold the
contractor liable for permit or regulatory violations.
The private partner, in turn, can protect itself some-
what through insurance or subcontracting. Both
partners assume responsibility for ensuring compli-
ance.
/" Contract Termination and
Step-in Rights
The circumstances under which your community can
intervene and take over performance is a critical
contractual issue, commonly referred to as "step-in"
rights. The area is complex because of the number of
parties involved, the timing of intervention, and the
concerns of investors and others with a financial
interest in a project.
One key contractual element defines when the owners
"accept" the construction as being complete. The
term "acceptable" has specific contractual and legal
meaning, and triggers important tax consequences.
All parties to the transaction must clearly understand
when acceptance occurs, under what circumstances it
may be delayed; and who bears the expense of a delay.
Another "step-in" rights issue is the termination
clause. A public contract frequently allows for
termination for convenience and termination for
default or cause. If a termination occurs, construction
or operation must continue. Therefore, the contract
must clearly specify who has the responsibility for
"stepping in" as well as the procedures and standards
for reaching financial settlements.
Typically, the surety who backs a performance bond
will want that opportunity. However, this contract
element is negotiable and any of the financiers,
insurers, subcontractors, parent companies, or the
25
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community itself may want to have this senior posi-
tion.
Warranties; and
Handling of residuals.
Finally, the contract must specify when "step-in"
rights can be exercised. Therefore, the contract must
unequivocally define such terms as "non-perfor-
mance," "poor performance" and "breach of contract."
Confusion in this area can only lead to expensive
disputes and an increased danger that the facility will
suffer serious performance difficulties.
S Insurance and Bonding
The contract should specify both the insurance cover-
ages and bonding required and which party is respon-
sible for obtaining them. Particular types of coverage
that should be considered are:
Property damage;
Business interruption;
Liability;
Cost overruns on unforeseen events or conditions;
Systems performance;
Bond;
Professional liability; and
Environmental impairment.
Because insurance and bonding control risk, they are
usually handled in conjunction with the risk allocation
issues considered earlier. Unlike standard insurances,
coverages such as systems performance and environ-
mental impairment are subject to market availability.
Depending upon insurance market conditions and
insurance carrier preferences, they may not be avail-
able at all times, and even existing policies may not be
automatically renewed.
/" Other Issues
This guide cannot discuss each contract provision.
You should make sure your service agreement ad-
dresses other provisions included in almost all public-
private partnership agreements, including:
Oversight and reporting (including audits);
Dispute resolution;
Subcontracting;
Conclusion
In essence, public-private partnership agreements
are designed to allocate risks among the parties in
proportion to their abilities to bear risks, and to
controOSctbrsi associatedwith those risks. Because
numerous parties are involved and the issues con-
cerned cover construction, operation, technologies,
and finance, these agreements inherently become
large and complicated. A community is well
advised_tojeek professional help in structuring
such as agreement in order to be satisfied that its
interests are well protected.
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Conclusion
We have Designed this Guide to Help You Get Started -
We Hope You Find it Useful
This guide introduces the concept of public-private partnerships for environmental services. It explores their
merits relative to traditional public provision of services and presents an action checklist of typical steps in form-.
ing a partnership. Some of the more complicated steps were given special attention. As the field matures and
conventions change, you should update the information in this guide by contacting the associations and institu-
tions listed in Part IV which follows. Reviewing public works journals will also help you keep up-to-date.
We at EPA are committed to implementing environmental programs required by Congress. We recognize that
one way or another, citizens must pay for these programs. Financing or otherwise providing these services in
conjunction with the private sector can be effective in reducing the price we all pay for a cleaner environment
while ensuring that our environmental goals are met.
Public-private partnerships may sound new and perhaps even unconventional, but many communities have found
them beneficial for a wide variety of services. We think you will too, either now or in the future. As a represen-
tative of your community and a trustee for the environment, you can fulfill your obligation to explore all the
alternatives for environmental services by giving public-private partnerships a careful evaluation. We have
designed this guide to help you get started - we hope you find it useful.
27
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28
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ParffV
Appendix
Resources for Assistance
on Public-Private Partnerships
29
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30
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Part IV
Appendix
Resources for Assistance
on Public-Private Partnerships
Associations/Organizations
Public-Private Partnerships
General Public Finance
Regionalization
Technology
Case Study Contacts
Public-Private Partnerships Contacts
Resources for Assistance on Public-Private Partnerships
The list that follows is divided into several parts. The first cites several national associations that provide techni-
cal assistance (through consulting or publications) on various aspects of public-private partnerships. The mem-
bers of these associations are either state and local officials or private firms involved in financing partnerships.
There may be similar statewide organizations that may be able to assist you.
In addition to your state's environmental agency, additional information and assistance may be available through
the state treasurer's or finance office. Other state agencies such as those for economic and community develop-
ment, small business, and transportation may also be able to offer advice or provide assistance to particular
aspects of your project. An additional resource may be found through state and local colleges and universities
that offer technical assistance.
The second part of this list directs you to publications that provide general information on financing, conducting
feasibility studies and determining your government's financial condition. A limited list of sources for technol-
ogy information follows. Finally, we have included contacts for all the case studies detailed in this document.
These lists are not all inclusive. The authors welcome your suggestions for additional associations and publica-
tions that could be added.
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ASSOCIATIONS/ORGANIZATIONS
Associations
American Bar Association
750 North Lakeshorc Drive
Chicago, IL 60611 .
312/988-5555
Association for Governmental Leasing & Finance
1101 Connecticut Avenue, NW
Suite 700
Washington, DC 20036
202/429-5135.
Government Finance Officers Association
180 N. Michigan Avenue
8th floor
Chicago, IL 60601
312/977-9700.
Government Finance Research Center of the GFOA
1750 K Street, NW
Suite 200
Washington, DC 20006
202/429-2750.
International City Management Association
777 North Capitol Street, NE
Suite 500
Washington, DC 20002
202/289-4262
National Association of Towns and Townships
Suite 730
1522 K Street, NW
Washington, DC 20005
202/737-5200.
National Association of Water Companies
Suite 1212
1725 K Street NW
Washington, DC 20006
202/833-8383
National League of Cities
1301 Pennsylvania Avenue, NW
Washington, DC 20004
202/626-3000.
Privatization Council
1101 Connecticut Avenue, NW
Washington, DC 20036
202/857-1142.
Public Securities Association
40 Broad Street
12th floor
New York, NY 10004
212/809-7000.
Water Pollution Control Federation
601 Wythe Street
Alexandria, VA 22314
703/684-2400.
National Conference of State Legislatures
1050 17th Street
Suite 2100
Denver, CO 80265
303/623-7800.
U.S. Conference of Mayors
16201 Street, NW
Washington, DC 20006
202/293-7330.
National Rural Water Association
2715 M Street, NW
Suite 300
Washington, DC 20007
202/333-8830.
National Association of Counties
440 First Street, NW
Washington, DC 20001
202/393-6226.
National Governors' Association
Hall of the States
444 North Capital, NW
Washington, DC 20001
202/624-5300.
32
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Association of State and Interstate Water Pollution
Control Administrators
Hall of the States
444 North Capital, NW
Washington, DC 20001
202/624-7782
Government Reftise Collection and
Disposal Association
P.O. Box 7219
Silver Spring, MD 20910
301/585-2898
National Solid Waste
Management Association
1730 Rhode Island Avenue, NW
Suite 1000
Washington, DC 20036
202/659-4613
Organizations
Colleges and Universities
(including Schools of Government)
For information contact:
National Association of Schools of
Public Affairs and Administration
1120 G Street, N.E.
Suite 520
Washington, DC 20005
202/628-8965
For information on state agencies, consult:
National Directory of State Agencies
Published by Cambridge Information
Group Directories, Inc.
JoAnne Duchez, Managing Editor
7200 Wisconsin Avenue
Bethesda, MD 20814
800/227-3052
33
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PUBLICATIONS
Public-Private Partnerships
Public-Private Partnerships Case Studies: Profiles of
Success in Providing Environmental Services. Wash-
ington, DC: Office of Administration and Resources
Management, U.S. Environmental Protection Agency,
1989.
Public-Private Partnerships (P3) Strategy. Washing-
ton, DC: Office of Administration and Resources
Management, U.S. Environmental Protection Agency,
1989.
General Proceedings and Action Agendas from the
U.S. Environmental Protection Agency's National
Leadership Conference on Building Public-Private
Partnerships. Washington, DC: Office of Admini-
stration and Resources Management, U.S. Environ-
mental Protection Agency, 1988.
Public-Private Partnerships Bulletin. Washington,
DC: Office of Administration and Resources Man-
agement, U.S. Environmental Protection Agency,
Nos.1-5, 1988-1989.
Alternative Financing for Solid Waste: General
Proceedings Region 4 Conference on Public-Private
Partnerships. Washington, DC: Office of the Comp-
troller, U.S. Environmental Protection Agency, 1988.
Public-Private Partnerships for Environmental
Services: Region 3 Conference Proceedings. Wash-
ington, DC: Office of the Comptroller, U.S. Environ-
mental Protection Agency, 1988.
Funding Our Environmental Future: General Pro-
ceedings Region 1 Conference on Public-Private
Partnerships and Alternative Financing Mechanisms.
Washington, DC: Office of the Comptroller, U.S.
Environmental Protection Agency, 1989.
Financing Infrastructure Innovations at the Local
Level. Washington, DC: National League of Cities,
1987.
Public-Private Partnerships for Environmental
Services: Anatomy, Incentives, and Impediments.
Washington, DC: Office of the Comptroller, U.S.
Environmental Protection Agency, 1988.
^
Contract Operation and Maintenance: The Answer for
Your Town? Washington, DC: Office of Municipal
Pollution Control, 1987.
Cook, Michael, Public-Private Partnerships: The
Small Water System Challenge. Washington, DC:
Office of Drinking Water, U.S. Environmental Protec-
tion Agency, 1988.
Edwards, Howard W., Successful Approach to Priva-
tization. Washington, DC: Center for Privatization,
1987.
Finley, Lawrence. An Entrepreneurial Process for
Privatizing at the Local Level, The Privatization
Review. The Privatization Council, New York, NY,
Winter 1987.
Hayes, Harry P. et al., How Effective are Your Com-
munity Services? Procedures for Monitoring the
Effectiveness of Municipal Services. Washington, DC:
The Urban Institute, 1977.
Impact of the Tax Reform Act of 1986 on Privatiza-
tion. Washington, DC: National Council on Public
Works Improvement, 1986.
Olstein, Myron, "Selecting a Privatizer", The Privati-
zation Review, The Privatization Council, New York,
NY, Spring 1986.
Scully, Larry and Cole, Lisa, "Privatization: Making
the Decision", The Privatization Review, The Privati-
zation Council, New York, NY, Spring 1986.
Valente, Maureen Godsey, "Local Government
Capital Financing: Options and Decisions", The
Municipal Year Book, 1986. Washington, DC:
International City Management Association, 1986.
34
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General Public Finance
Groves, Sanford M. and W. Godsey, Maureen.
Evaluating Financial Condition, 2nd ed. Washington,
DC: International City Management Association,
1986.
Moak, Lennox, Municipal Bonds: Planning, Sale
and Administration. Chicago, IL: Municipal Finance
Officers Association, 1982.
Rosenberg, Philip and Stallings, C. Wayne, Is Your
City Heading for Financial Difficulty? A Guidebook
for Smaller Cities and Other Governmental Units.
Chicago, IL: Municipal Finance Officers Association,
1978.
Standard & Poor's Corporation, Debt Ratings Crite-
ria: Municipal Overview. New York, NY: Standard
& Poor's Corporation, 1986.
Financial Capability Guidebook. Washington, DC:
Office of Water, U.S. Environmental Protection
Agency, 1984.
Touching All the Bases: A Financial Management
Handbook for Your Wastewater Treatment Project
(EPA/430-9-86-001). Office of Municipal PoUution
Control, Municipal Facilities Division, U.S. Environ-
mental Protection Agency, 1986.
Reference Guide on State Financial Assistance
Programs. Washington, DC: Office of Water, U.S.
Environmental Protection Agency, 1988.
Vogt, A. John, et al., A Guide to Municipal Leasing.
Chicago, IL: Government Finance Officers Associa-
tion, 1985.
Raftelis, George A., The Arthur Young Guide to Water
and Wastewater Finance and Pricing. Chelsea, MI:
Lewis Publishers, Inc., 1989.
Local Financing for Wellhead Protection (EPA/440-
6-89-001). Washington, DC: Office of Water, U.S.
Environmental Protection Agency, 1989.
Building Support for Increasing User Fees (EPA/430-
09-89-006). Washington, DC: Office of Water, U.S.
Environmental Protection Agency, 1989.
HegienaSization
Giachino, John and Ferguson, Carol, "Regionalization
Concepts Aids Wastewater Systems", American City
and County, September 1986, V. 101, No. 9, p. 82.
Regionalization Options for Small Water Systems
(EPA 570/9-83-008). Washington, DC: U.S. Environ-
mental Protection Agency, June 1983.
Humphrey, Nancy and Walker, Christopher, Innova-
tive State Approaches to Community Water Supply
Problems. Washington, DC: The Urban Institute,
December 1985.
Technology
Wastewater
Effectiveness of the Innovative and Alternative Waste-
water Treatment Technology Program: Report to
Congress (EPA/430-09-89-009). Washington, DC:
Office of Water, U.S. Environmental Protection
Agency, 1989.
Proceedings of the U.S. EPA Municipal Wastewater
Treatment Technology Forum 1989. Office of Water,
U.S. Environmental Protection Agency, 1989.
It's Your Choice: A Guidebook for Local Officials on
Small Community Wastewater Management Options
(EPA/430-09-87-006). Washington, DC: Office of
Water, Office of Municipal Pollution Control, U.S.
Environmental Protection Agency, 1987.
Treat It Right: A Local Officials Guide to Small Town
Wastewater Treatment. Washington, DC: National
Association of Towns and Townships, 1989.
Small Wastewater Systems: Alternative Systems for
Small Communities and Rural Areas. Washington,
DC: Office of Water, Program Operations, U.S.
Environmental Protection Agency, 1987.
35
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For a variety of readings on wastewater treatment
technology contact:
National Small Flows Clearinghouse
West Virginia University
P.O. Box 6064
Morgantown, WV 26506-6064
800/624-8301
Solid Waste
Decision Makers Guide to Solid Waste Management
(Guide: EPA/530-SW-89-072 & Brochure: EPA/530-
SW-89-073). Washington, DC: Office of Solid
Waste, U.S. Environmental Protection Agency, 1990.
Yard Waste Composting: A Study of Eight Programs
(EPA/530-SW-89-038). Washington, DC: Office of
Solid Waste and Emergency Response and the Office
of Policy, Planning and Evaluation, U.S. Environ-
mental Protection Agency, 1989.
Recycling Works! State and Local Solutions to Solid
Waste Management Problems (EPA/530-SW-89-014).
Washington, DC: U.S. Environmental Protection
Agency, 1989.
Bibliography of Municipal Solid Waste Management
Alternatives (EPA/530-SW-89-055). Washington,
DC: Office of Solid Waste, U.S. Environmental
Protection Agency, 1989.
The Solid Waste Dilemma: An Agenda for Action
(EPA/530-SW-89-019). Washington, DC: Office of
Solid Waste, U.S. Environmental Protection Agency,
1989.
Local Officials Guide - Municipal Incinerators: 50
Questions Every Local Government Should Ask.
Washington, DC: National League of Cities, 1988.
Drinking Water
The Nation's Public Works: Report on Water Supply,
Categories of Public Works Series. Washington, DC:
National Council on Public Works Improvement,
1987.
Nyer, Evan K., Groundwater Treatment Technology.
New York: Van Nostrand Reinhold Company, 1985.
Gumerman, Robert C. et al., Small Water System
Treatment Costs. Park Ridge, New Jersey: Noyes
Data Corporation, 1986.
Technology Transfer Environmental Protection
Control Alternatives: Drinking Water Treatment in
Small Communities. Washington, DC: Office of
Water, Technical Support Division (Cincinnati, OH),
U.S. Environmental Protection Agency, Scheduled
1990.
36
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Case Study Contacts
Mount Vernon, IL
James Bassett
City Manager
City Hall
1100 Main Street
ML Vernon, fl 62864
618/242-5000
Millbury, MA
Earl W. Chase, Jr.
Administrator
Town Hall
127 Elm Street
Millbury, MA 01527
508/865-4710
Scottsdale, AZ
Jim Nelson
Water Quality & Conservation Manager
9191 East San Salvador Drive
2nd Floor - New Corporation
Scottsdale, AZ 85258
602/391-5681'
Downingtown, PA
Donald Greenleaf
Borough Manager
4 West Lancaster Avenue
Downingtown, PA 19335
215/269-0344
KerrviIle,TX
Bart Hines
Public Works Director
800 Junction Highway
Kerrville, TX 78028
512/257-8000
Western Carolina Sewer Authority
Charles Douglas
Director
Mulden Road
P.O. Box 5242
Greenville, SC 29606
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EPA Contacts
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3
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Jf
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
^
7
7
4
6
1
3
1
5
5
4
7
8
7
9
0 vJ
Iowa
Kansas
Kentucky
j
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
1
2
6
2
4
8
5
6
10
3
1
4
8
S
New Hampshire
New Jersey
New Mexico
New York
North Carolina
NorthDakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
J 4
6
8
1
3
10
3
5
8
9
3
9
9
9
2
2
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin.
Wyoming
American Samoa
District of Columbia
.Guam
Northern Mariana
Pacific Trust Territories
Puerto Rico
Virgin Isknds
Public-Private Partnerships Regional Coordinators
George Mollineaux
EPA-Region 1
John F. Kennedy Federal
Building
Boston, MA 02203
(617)565-9442
Alice Jenik
EPA-Region 2
26 Federal Plaza
New York, NY 10278
(212)264-9860
Cathy Mastropieri
EPA-Region 3
841 Chestnut Street
Philadelphia, PA 19107
(215)597-4149
Tom Nessmith
EPA-Region 4
345 CourUand Street, N.E.
Atlanta, GA 30365
(404)347-7109
Rosalie Day
EPA-Region 5
230 South Dearborn Street
Chicago, IL 60604
(312)353-6324
Bob Carson
EPA-Region 6
1445 Ross Avenue
Dallas, TX 75202-2733
(214) 655-6530
Ray Hurley
EPA-Region 7
726 Minnesota Avenue
Kansas City, KS 66101
(913) 551-7045
David Wann
EPA-Region 8
Suite 500
99918th Street
Denver, CO 80202-2405
(303)293-1621
Marsha Harris
EPA-Region 9
75 Hawthorne Street
San Francisco, CA 94103
(415) 744-1635
Matt Coco
EPA-Region 10
1200 Sixth Avenue
Seattle, WA 98101
(206)442-0705
38
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Public-Private Partnerships Headquarters Staff
Charles L. Grizzle
Assistant Administrator
Office of Administration and
Resources Management
202/382-4600
David P. Ryan
Comptroller
202/475-9674
John J. Sandy
Director
Resource Management Division
202/382-4425
David Osterman
Chief
Resource Planning and Analysis Branch
202/245-4020
Staff: Joanne Lynch
Leonard Bechtel
Margaret Binney
Ellen Fahey
Kim Lewis
Timothy McProuty
Eugene Pontillo
For more information writes
Public-Private Partnerships Initiative
U.S. Environmental Protection Agency
401 M Street, S.W.
(H3304) .
Washington, DC 20460
39
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*U.S. Government Printing OĢ!cĢ: 1991523-164
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