If balancing the bare necessities of providing and maintaining city services is not difficult enough, we city dwellers demand that our local governments deliver civic innovation to compete with rival municipalities on a regional, national and global scale. Though as the burden of paying for essential capital improvement projects rests more and more with local governments, cities are being asked to find money that doesn’t exist, all the while attempting to improve quality of life in the quest to attract more talent and more businesses. Neither Rome nor Austin were built in a day, yet the visionary minds responsible for their emergence found ways to pay for their grand schemes, one way or another.
Given Lafayette’s financial predicament, exploring public-private partnerships (P3s) for capital projects could open up a powerful set of solutions for building a competitive city, a path the state is currently paving.
Today the city yields insufficient tax revenue to feed its infrastructure monster, or to support the money-hungry hydra of public works that grew out of city-parish consolidation in the mid 1990s. With Lafayette facing what amounts to a generational funding crisis, the perennial question remains: How can the city pay for quality of life enhancements and innovation when the bare necessities are scarcely in order?
A similar question was posed to the City-Parish Council-appointed Future Needs/Funding Sources Committee in 2014. Perhaps not surprising, the recommendations revolved around de facto methods such as temporary taxes and re-allocating city bonds for “shovel-ready” road infrastructure, millage increases for parks and an additional property tax levy for special drainage districts.
Conventional revenue methods have simply not allowed the city to keep up with the backlog of projects, potentially stifling the city’s competitiveness. And they have failed to prompt officials to think beyond basic infrastructure long enough to consider projects that can cement Lafayette as an emerging regional power. That is not to suggest that these conventional methods are without merit and should be ignored as a piece of the funding puzzle. But taxes struggle to move minds in voting booths, let alone move dirt on ambitious civic projects. More important, when passed, they can impose a tax burden on citizens without obvious results and poor accountability.
Collaboration among public and private agencies, of course, has its drawbacks. There often exists an inherent paradoxical tug-of-war between local government and private developers, entities that tend to want different versions of the same thing. Though with the depletion of the public resources needed to fulfill basic civic needs, combined with pressures for more accountability in financial investments, P3s are becoming increasingly more essential to dynamic city planning efforts.
These arrangements tend to work best when the public sector has funding or debt constraints, or when a particular project can benefit from private sector expertise and efficiency. At their core, P3 projects allow local governments to leverage their community assets, while giving the private sector greater access to developable properties.
Each partnership is different and comes with a unique set of challenges. But every successful partnership starts with a carefully selected team and clear mutual goals that define the sharing of risks, responsibilities and rewards.
With the federal government’s Highway Trust Fund functionally insolvent since 2015, the burden of responsibility for paying for upgrades and new infrastructure has largely fallen to states and municipalities. Unfortunately there has been a recognizable knowledge gap regarding the relatively novel use of P3s. While much has been done in recent years to catch up with the international scene, implementation at a local level has been slow. As P3s have become an increasingly popular tool among U.S. policymakers for financing infrastructure projects, some states have finally begun to set up dedicated offices charged with examining how these deals are structured to ensure public interest return value.
In late 2016, Louisiana passed a P3 law that is intended to streamline the state’s process for maintaining and constructing highways and bridges. Shortly after, Gov. John Bel Edwards established an 18-member task force charged with identifying and making actionable recommendations regarding P3 capability to address a well-documented $13 billion backlog (double that if you count mega-projects like the I-49 Connector). It remains to be seen if the state’s interest in partnering with private industry will find its way down to the municipal governments.
Given the fiscal issues strapping local infrastructure in Lafayette Parish and the extraordinary development challenges brought with the impending I-49 Connector project, it behooves local officials to quickly examine the opportunities that P3 models could provide to the city as it seeks to build on the goals laid out in its Comprehensive Plan. They include capital-intensive initiatives like transit-oriented developments and neighborhood-scale projects, as well as incremental developments like the revitalization of Downtown.
Lafayette has, over the years, taken to new funding strategies like Tax Increment Financing, a breed of public-private arrangements not dissimilar to P3s in its functionally collaborative approach. But when Lafayette established a TIF district in 2006 for the Target-anchored development in Upper Lafayette, there was significant debate and skepticism as to what incentives were being made available and who was responsible for footing the tax bill. Despite hurdles, that experience shows that Lafayette has an appetite for exploring new ways of working with private developers to move the city forward.
The opportunities that can stream from P3s cover a wider spectrum of project types, such as the redevelopment of abandoned lots and historic buildings, cultural tourism, health care facilities/services, housing and urban revitalization and even whole corridor infrastructure. TIFs, on the other hand, are not generally thought of as sole support models for funding essential infrastructure. In that regard, and given the fact that they tend to promote a more transparent, mutually beneficial process, P3s have the edge.
As the Lafayette City-Parish Council goes back to the drawing board in 2017 to discuss avoiding infrastructure insolvency, it will likely once again focus on proposing new taxes on residents. While the answers may not be completely clear, Lafayette can no longer delay exploring public-private partnerships. As action and support from the state ramp up, the P3 model may prove beneficial to not only addressing current financial instability, but in setting Lafayette on a path toward sustainable and equitable transformation.
Cities clearly have many options to consider when sourcing project funds. It is the cities that have the creativity and innovative mindset to make the most of those funding models that will continue to lead and thrive.
William Hunter is an urban designer/planner in the Urbanism Studio at Architects Southwest.