The office has to be agnostic on the benefit of P3s to ensure city residents get a good deal, an outside expert says.

Construction work at Denver International Airport, Oct. 23, 2018. (Kevin J. Beaty/Denverite)

By David Sachs The Denverite Oct 25 2018

The Hancock administration is moving forward with its bid to streamline huge contracts with private companies to deliver massive public infrastructure projects. You might know these agreements as public-private partnerships. Government types call them P3s.

Mayor Michael Hancock plans to centralize the P3 process in the newly created Performance Based Infrastructure Office (cute, right?). His 2019 budget makes room for two full-time employees, who aren’t hired yet, to run the office. Assuming the City Council approves the budget, it will kick into gear sometime next year.

When governments want to build big things but lack the public resources to do it, they’re increasingly turning to the private sector for help. They might design, build, operate and maintain the facility, depending on the agreement. Companies don’t help out of the good of their hearts — they do it for profit. They get paid for the work, plus interest if they provide financing up front, or revenue yielded from the project.

For example, Denver International Airport’s “Great Hall” renovation will earn a private consortium $1.8 billion over 34 years for a $650 million to $770 million project. Great Hall Partners will have control of concessions in the main terminal and collect some of their revenue, while the city would make payments to the developer out of its share of vendor proceeds.

The new Denver Performing Arts Center and parts of the National Western Center complex could be in line for P3s as well.

Private partnerships are often costlier than borrowing money with Denver’s AAA bond rating. But in return, P3s transfer risk to the private sector, said Emily Hauber, a senior policy advisor to Hancock. Companies often become responsible for operation and maintenance — and cost overruns. (Try telling that to RTD, whose private partner, Denver Transit Partners, is suing the transit agency and claims it’s not responsible.) Plus the city gets public amenities sooner rather than later.

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INC DELEGATE MEETING MINUTES Aug 2017

Margie Valdez proposed a motion related to the city’s P-3 office. The motion stated:

“Inter-Neighborhood Cooperation (INC) strongly urges the proposal to create an office for public-private partnerships within Denver City Government that will screen, vet and shepherd P-3 or public-private partnerships related to major city projects be delayed until such time as the specifics of the proposal have been released or shared and adequate time is included for the proposal to be vetted with both City Council members and the public-at-large. Further, INC requests City Council to refuse to support the proposal known as P-3 until more informed community discussion and transparency can occur.”

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Guest Post: An Office of Public Private Partnership Denver Doesn’t Need

In many ways P3s been around for a long time.

But in the last decade or so, they have become little more than the private sector using public infrastructure to maximize their profits – often times with the public taking the risks. Large scale projects often running into billions of dollars, P3s are common today, in Colorado, and throughout the country. Two of the most recent here in Colorado are the D.I.A-Ferrovial deal and the renovation of the Great Western Stock Show complex. There is also proposal to fund what could be a Denver 2026 Olympics bid with PPP to avoid state funding.

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