Public-private partnerships in Urban Development - lessons from Danish and international research Ole Helby Petersen Seniorforsker, ph.d. KORA (olhe@kora.dk)
The challenge of PPPs 2
Public Private Partnership: A brand! Private Finance Initiative (PFI) in the UK à Tony Blair 1997: Partnerships and Third Way Vested interests: OECD, World Bank, UN, European Union - PPP is a good thing! Governments across Western democracies: PPP as a good thing! (although not always clear why) Academic research: PPP experiences are so far mixed and private finance is not always efficient Partnerships are really not all that new (Wettenhall, 2003) PPP as language game or organisational/financial scheme (Hodge & Greve, 2005)
PPP models Concept - development Design/ Build Maintain Operate Finance PUBLIC-PRIVATE PARTNERSHIP WITH PRIVATE FINANCE INSTITUTIONAL PUBLIC-PRIVATE PARTNERSHIP (IPPP) PUBLIC-PRIVATE PARTNERSHIP WITH PUBLIC FINANCE PARTNERING SERVICE PARTNERSHIP ALL-INCLUSIVE CONTRACT CONTRACT OUT CONTRACT OUT
The changing scope of public and private Local government reform: Larger units: Volume of projects Professionalism: Managing complexity in PPPs Complex problems require collaboration across multiple stakeholders Innovative solutions within networks of public, voluntary and private actors Interdependence is a basic condition A more de-ideological approach to working together across public-private boundaries Changed role of public sector: From supplier to qualified partner 5
PPPs in Denmark project list Project Finance Sector Authority Vildbjerg Skole i Trehøje OPP med privat finansiering Undervisning Herning Kommune Ørstedsskolen i Rudkøbing OPP med privat finansiering Undervisning Langeland Kommune Frederikshavn Ny Byskole OPP med offentlig finansiering Undervisning Frederikshavn Kommune Helsinge skole og svømmehal OPP med offentlig finansiering Undervisning Gribskov Kommune Nye arkiver Bl Rigsarkivet i København OPP med privat finansiering Offentlige ejendomme Bygningsstyrelsen Tinglysningsret i Hobro OPP med privat finansiering Offentlige ejendomme Bygningsstyrelsen SkaDecenter i Haderslev OPP med privat finansiering Offentlige ejendomme Bygningsstyrelsen Retsbygninger i Herning, Holbæk, OPP med privat finansiering Offentlige ejendomme Bygningsstyrelsen Holstebro og Kolding Hovedsæde Bl Vestre Landsret i Viborg OPP med privat finansiering Offentlige ejendomme Bygningsstyrelsen PoliBstaBon i Hobro Ikke oplyst Offentlige ejendomme Bygningsstyrelsen ReDen i Roskilde OPP med offentlig finansiering Offentlige ejendomme Bygningsstyrelsen Landsarkivet i Viborg Ikke oplyst Offentlige ejendomme Bygningsstyrelsen Magasinbygning Bl stadsarkivet i OPP med privat finansiering Offentlige ejendomme Aalborg Kommune Aalborg Musik- og teaterhus i Odense OPP med privat finansiering (med Kultur og frifd Odense Kommune indskud af offentlig kapital) Svømmecenter i Randers OPP med privat finansiering (med Kultur og frifd Randers Kommune element af brugerbetaling) P- hus ved Aarhus Sygehus OPP med privat finansiering (baseret på Parkeringsanlæg Region Midtjylland brugerbetaling) Motorvejsstrækning Kliplev- OPP med offentlig finansiering Vejområdet Vejdirektoratet Sønderborg DaginsBtuBon i Skanderborg OPP med privat finansiering Børnepasning Skanderborg Kommune 6
Barriers to PPPs? To some extent! Partly uncoordinated policy and regulation framework Tax and value-added tax major issue (still is!) Restrictions on local government lending through PPP Finance Ministry: Policy veto-player Private money seen as more expensive And not really needed! Placing major public investments on or off government balance sheet (Eurostat decision, 2004) Present situation: reinvention of the institutional framework for Danish PPPs (PPPs with public finance)
Selected PPP country experiences Norway: 3 road schemes as PPP, but PPP rejected for future projects (public finance seen as more attractive) Sweden: New hospital (Karolinska) + Arlanda-Stockholm railway Netherlands: Widespread debate about PPPs as urban development but fewer projects actually implemented Ireland: infrastructure deficit in the 1990 s and falling shares of EU funds à large-scale PPP program Ireland: App. 70 major PPP schemes planned and/or implemented (the private finance element has been crucial) California: Private financing of major road projects (toll-roads), inspiration from Europa (in particular France) Spain: Mainly PPPs in transport: roads, light railways etc.
Are PPPs better value-for-money? VFM: defined as the effective use of public funds on a capital project (Grimsey & Lewis, 2002: 109) à better quality for the same money or same quality for less money Governments + consulting firms + international organisations: overwhelming positive assesments Academic research within economics, public administration, public management: Mixed experiences, positive and negative experiences documented No value-for-money evaluations of Swedish PPP projects No value-for-money evaluations of Danish PPP projects
Conclusions and ways ahead for PPPs So far mainly new construction projects and some ESCO projects in Danmark PPP model for maintainance is currently being developed (Konkurrence- og Forbrugerstyrelsen) Private finance is controversial and often seen to be more expensive UK experience: Private finance signicantly more expensive Institutional investors: Need for careful evaluation of interest rates compared to public finance Urban development: Most relevant lessons probably from Dutch PPPs 10
Thank you! OPP-Nyt: http://www.akf.dk/udgivelser/oppnyt/ olhe@kora.dk 11
Financial setup of PPP PPP-project: the public partner s payment profile Traditional project: the public partner s payment profile 1 4 7 10 13 16 19 22 25 28 Year 1 4 7 10 13 16 19 22 25 28 Year