Board Receives Update on Public-Private Partnerships
November 15, 2006--The school board received an update on public-private partnerships (PPPs) at yesterday’s Facilities Committee. Senate Bill 2009 was ratified in August 2006, giving school systems the ability to enter into a lease for privately developed public schools. Previously, N.C. school systems could lease and renovate facilities, but now, the Board of Education would identify where schools are needed, provide design and construction specifications to the builders, and then lease the facility upon completion.
PPPs are a financing mechanism. Basically, districts would trade off capital funds generated by bonds for cash for annual lease payments. While PPPs in other states typically have not shown major cost savings in building costs, there can be a time savings, which equates to beating inflation. There are a number of unknowns at this point, including the determination of available revenue streams.
Staff presented comparisons of the PPP and design plus construction management at risk methods, identifying similarities and differences. PPPs might be able to procure land faster, but the private companies would still have to go through the similar approval process and bidding process that the Wake County Public School System does now. Design could be less, and tax credits for energy saving items exist for private industry, but not for non-profits. The lease cost would reflect any change orders during construction. Maintenance could be a part of the lease agreement or separate and there could be some potential savings with utilities. However, there are fees associated with PPPs – partners have profits and overheads to cover.
The Facilities Committee directed staff to continue to produce the needed documentation for a future Request for Qualifications from interested developers. The committee will review selection criteria, lease terms and financial analysis models to show that the projects are in the best interest of the school system and, ultimately, the taxpayers.
WCPSS’s Facilities Department has met with a dozen or more companies interested in the district’s plans for public-private options.
Horace Tart, Facilities Committee chair, said: “We are encouraged by today’s report. While there are items to consider, this may help us in providing the seats we need sooner than other options we have had in the past.”
Staff suggested a pilot program to compare traditionally built schools with ones built by private developers and will present more information to the committee in December.
WCPSS will share yesterday’s information with the independent Citizens Facilities Advisory Committee in December as well.
Some other highlights of SB 2009 include:
- School board may enter into a lease that lasts no more than 40 years
- PPPs must be approved by county commissioners and the Local Government Commission
- The lease is a continuous contract for capital outlay
- Must be in the best interest of the school system
- Developer must be qualified to develop schools
- Developer must seek minority participation
- Covers new or existing buildings
- New construction or renovations
- No pledge of taxing power or faith/credit of Board of Education/Board of County Commissioners
- No agreements on student assignment
- School board may consider time, cost, quality, lease payments, life cycle maintenance, repair schedules, energy usage
- Private developer shall solicit prime contractor bids or select a qualified construction manager
- All bidding must be in accordance with N.C. building codes (GS 143-128.2)
- Real estate transfer is authorized with Board of Education/Board of County Commissioners approval
- Additional terms may include: site selection, financing, energy usage guarantees, facility maintenance, repairs and scheduled replacements of equipment
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