After paying an outside consultant nearly $1 million and spending months wrangling with the City Council about oversight, Denver city officials are ready to roll out their vision for an internal office dedicated to public-private partnerships.
But it will be up to council members whether to fund the effort.
City officials say the proposed “performance-based infrastructure,” or PBI, program draws on best practices from around the world for how best to employ partnerships to get major infrastructure projects built and tend to their long-term upkeep, while the private-sector partners share in project benefits and risks.
The practice, gaining traction with cities and government agencies across the U.S. including the Colorado Department of Transportation, is viewed in the mayor’s office as especially important at a time when Denver is growing and federal investment in infrastructure is waning.
City government’s first foray into partnership deals was a big one: Denver International Airport’s 34-year, $1.8 billion contract with Great Hall Partners, led by Madrid-based Ferrovial Airports. Approved by the council last year, the deal mixes public and private money to fund a $650 million renovation of the terminal building that will begin soon, including the eventual relocation of security screening to the upstairs level. Ferrovial then will oversee expanded concession spaces in the terminal for three decades, sharing revenue with DIA while the airport makes annual operating payments to Ferrovial.
“The City and County of Denver is committed to making life better for Denver residents by leveraging all of the tools in the toolbox to build, operate and maintain public infrastructure projects,” Emily Hauber, Mayor Michael Hancock’s senior adviser for federal affairs and government relations, said in an email.
The program and its management office would “evaluate potential partnership opportunities with the private sector to deliver projects throughout the city” and “follow a defined, transparent process to determine how best to finance and develop a project to ensure the best long-term results, value and accountability,” Hauber wrote.
Administration officials unveiled details about that project-vetting process Thursday morning to council members, several of whom have scrutinized that aspect in detail in the past.
Projects deemed large enough to warrant public-private partnership, or P3, treatment would go through five stages: planning, screening, structuring, procurement and implementation. “Extensive public input” would be sought at various points throughout, according to a city fact sheet, with inclusiveness, accessibility and economic opportunity for all serving a guiding principles. Completed projects’ ability to meet preset performance standards would dictate compensation for private partners during the life of a contract.
Last summer and fall, Hancock aides who were working out the initial proposal for the new office faced resistance from council members. That’s largely because the initial proposal would have given council members a voice in framing a partnership solicitation, but would have removed their standard authority to approve final large contracts.
The Hancock administration backed off that idea after the City Council withheld for months $480,000 in funding for the continued services of a consulting firm that was helping the mayor’s office developing its P3 framework and policies. The firm, Arup Advisory Inc., was eventually authorized for $955,000 in work.
Councilwoman Robin Kniech said ahead of Thursday’s presentation that she and other members were eager to see how the administration’s plans had evolved, and for more detail on how it will evaluate the financial wisdom of potential partnership ideas.
She will be looking, she said, for the office to brief the council frequently on negotiations for partnerships as they develop — not just at the end, when there’s a proposed deal. Those briefings, which involve sensitive discussions, could occur behind closed doors, as she recalled occurring for the Regional Transportation District’s board when RTD sought a partnership to build and operate its rail lines.
“Whether it’s about framework ordinances that have goals and reporting to council, and that keep us involved in a more ongoing way, or whether it’s a culture of doing that, that’s what I’ll be looking forward to,” Kniech said Wednesday.
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The administration will again rely on council funding support if it hopes to launch the new office by late summer, as planned. The city budget this year includes $2.5 million for creating the program, but its use requires council sign-off. The office could eventually include three full-time staff: an executive director, an attorney and a financial specialist.
Public-private partnerships notably have been employed for roadway projects in Colorado, such as the expansion of U.S. 36 between Denver and Boulder. But the city’s preliminary pipeline calls for exploring them for social-centric projects, too, including at the National Western Center.
The city is working with the Western Stock Show Association and Colorado State University on $1 billion in plans for initial phases that will transform that campus, with the city portion amounting to $765 million. But still unfunded are later phases that call for a 10,000-seat arena, a large exposition hall, the redevelopment of the Denver Coliseum and the retrofitting of the century-old Stadium Arena to turn it into a market.
This is where city officials envision private partners bringing both money and ideas to the table for how to build those projects. They are slated for 60 acres of land referred to as “the triangle,” roughly between Brighton Boulevard and a rail corridor, and project officials say the four required projects would require about 18 acres.
That leaves 42 acres that developers could propose for a mix of private-sector redevelopment, open space and other uses. But Gretchen Hollrah, the director of the city’s project office, says that when the city starts seeking potential partners later this year, it will require that they include community input on potential types of development to plot out on the site.
After narrowing the list of potential long-term partners, the city could seek concrete proposals for the triangle area as soon as next year, Hollrah said.
Administration officials say partnerships will be analyzed for large-scale projects only if they’re worthy of the time and cost of working out complex contracts. Sam Mamet, executive director of the Colorado Municipal League, endorses that approach.
“For big city mega-projects like the Stock Show redevelopment, a P3 makes good sense,” Mamet said in an email this week. “And, it makes good sense for Denver to establish an office to provide the oversight needed. These are complex undertakings.”
Some public-policy groups urge caution in pursuing such partnerships. An Oakland-based group called In the Public Interest, for example, says contracts that last decades and cover details that are subject to unpredictability or varying trends make P3 deals complex, and overly difficult, to negotiate effectively.
“You’ve got to anticipate what both sides want and everything that could go wrong,” Donald Cohen, the group’s executive director, told The Denver Post last year.
Randy Harrison, a senior research follow with the University of Colorado Denver’s school of public affairs, has spent years studying and advocating for public-private partnerships. Thanks to entities like CDOT’s High-Performance Transportation Enterprise, which explores partnerships for highway projects, Harrison says Colorado is developing a reputation for expertise and capability in crafting P3 deals.
“I think Denver structuring an office to really improve all aspects of their ability to develop and manage these (partnerships) really gives the city a higher level of accountability and a better chance of performance and success,” Harrison said.
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