At their core, public-private partnerships are risk sharing relationships between higher education institutions and private sector developers and service providers. Many institutions are embracing P3s to unlock the value of their campus properties, generate revenue, and create attractive campus facilities. P3s, if done correctly, can pave the way for a variety of new buildings and centers, ranging from student housing to hotels to physical plant/infrastructure upgrades. These can generate revenue for the institution and draw more students into the campus community.
A P3 development may take years to complete from the initial planning and RFP process to the final opening of the new or renovated facility. Before construction begins, however, there are several key concepts you should understand, as they will inform the nature and scope of your P3 project:
Build-Own-Operate (also referred to as BOO): Under the build-own-operate strategy the developer carries the responsibility for designing, funding, constructing, operating, and maintaining the new facility during a pre-negotiated concession period. Under this strategy there is no special provision for transferring the facility to the institution after the concession period; following the concession period, a new or renegotiated agreement will be required, or the institution might purchase the facility outright from the developer.
Build-Own-Operate-Transfer (BOOT): Like the above, except that the developer or “concession company” may not own the facility.
Design-Build-Finance: A P3 strategy where funding for the new project comes from a private sector source, but the private sector does not operate or provide services at or to the facility.
Design-Build-Finance-Operate: A service provider will be responsible for financing and operating the facility (in whole or in part), in addition to carrying the weight of the design and construction phases.
Design-Build-Operate: Financing is obtained from the public sector, but the institution or developer remains responsible for design, construction, and operation.
To learn more about the P3 projects in higher education, P3 development timelines, and the best strategies to develop a P3 RFP for your campus, join AGBIS for one of our complimentary webinars on public-private partnerships (P3s) for campus investments, or call 202-776-0868 to schedule a meeting with a member of our P3 team.
Chris Moloney, Senior Consulting Associate, AGB Institutional Strategies