Fiscal crises spur growth of public-private partnerships

You’re going to hear a lot more about what the insiders call “P3” in the days and years to come — and at least one Atlanta law firm is ready to pounce.

Jeff Haidet

Jeff Haidet

I’m talking about public-private partnerships — a financial arrangement that is becoming more popular as state, local and federal governments wrestle with fiscal crunches.

“P3 is gaining in popularity because it’s a solution to funding constraints. Governments still have to provide services,” said Jeff Haidet, chairman of the McKenna Long & Aldridge law firm, which specializes in helping companies navigate the twists and turns of doing business with government.

The politically connected firm boasts a roster that includes Howard Dean and Zell Miller as consultants, as well as full-timers with Republican and Democratic pedigrees. Among the local ones are Gordon Giffin (former U.S. ambassador to Canada in the Clinton administration), Eric Tanenblatt (former chief of staff for Gov. Sonny Perdue) and Steve Labovitz (former chief of staff for Atlanta Mayor Bill Campbell). Last year, the firm posted $277 million in revenue from 10 offices.

P3 projects run the gamut. Governments need money to rehabilitate their infrastructures, provide better transportation, build new facilities and finance other projects they can’t afford. But kicking the can down the curb only means the work will cost taxpayers more money later. At some point, roads, bridges and sewers have to be repaired or built.

One alternative — get private companies to foot part of the bill, which many are willing to do as long as they can share in some of the revenue. In this case, we’re generally not talking about handing over the levers of control to a private firm to run an entire operation, Haidet said. Some sort of joint venture usually emerges, depending on the type of project financed.

“It has a lot of different faces,” he said.

Some of the local faces include toll roads, the proposed multi-modal transit hub and related development downtown and a possible new stadium for the Falcons.

Across the country, Haidet said, the projects have involved companies that help finance new courthouses for a share of the concession and restaurant revenue, or supply the equipment to catch drivers going through red lights for part of the ticket revenue. On the federal level, private companies are building military housing in exchange for the lease revenue, Haidet said.

“It creates a lot of opportunity, and that’s where businesses need our guidance,” Haidet, 51, said.

For 60 years, McKenna Long has made a specialty of government work, partly by tapping the expertise of former politicians and insiders. In the past, that meant helping companies gain government contracts or deal with regulators. It also has meant lobbying.

But three years ago, Haidet said, the firm started to focus on P3 as governments faced intensifying budget problems. One advantage in such deals is that there are plenty of ways to structure them so both sides can benefit, he said.

“All kinds of permutations are possible,” Haidet said. “We’re betting on the fact that it’s going to be an accepted way of doing business.”

With cash-strapped governments, my guess is that it will.

- Henry Unger, The Biz Beat

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6 comments Add your comment

Road Scholar

May 17th, 2011
6:06 am

Georgia has kept “kicking the can down the road” on transportation for some time!

Henry Unger

May 17th, 2011
6:13 am

Yes it has Road Scholar and it has hurt both our quality of life and our ability to lure some companies here.

Enry Hunger

May 17th, 2011
8:27 am

P3 causing fast growth is dangerous. It’s like what just happened in China with the expoding watermelons.

Brad Steel

May 17th, 2011
9:39 am

What a crock!

“Public-private partnerships” are just another specious argument for enriching private parties with tax-payer dollars. We all know who gets left holding the bag of ….

Or maybe not…(yeah right!)… just look at the success of all the tax-payer subsidized sports arenas.

MrLiberty

May 17th, 2011
11:00 am

Fascism by another name.

Government uses the power of the gun, the regulation, the threat of prison, etc. to maintain its monopoly position in certain “services.” Yes, they fail miserably in everything they do, and thanks to the monopoly no real true competition can rise up and put them out of business. So when they fail as they always do they come up with schemes to transfer their monopoly to a private business that will profit heavily, abuse the customers, prevent competition, and ultimately transfer all liability back to the taxpayers one way or the others. So called conservatives also like to call this “privatization.”

Yet another argument against government and its monopoly on power.

TnGelding

May 19th, 2011
1:34 am

Anything for progress in this backward looking state. It’s a shame it has come to this. If corporate America doesn’t get off the sidelines we’re going to have to take it even further and start confiscating factories scheduled for closing and form consortiums of government, unions and financiers to run them.