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Municipalities and cities across the United States are struggling. Years after the Great Recession, many cities remain under pressure. Even for cities in good financial shape, the current economic climate has increased pressure to trim expenses, keep costs under control and manage complex assets efficiently.
Many localities have turned to new ways of funding infrastructure upgrades. These have included tax-increment financing as well as public-private partnerships. Often, the benefits are matched with substantial risks.
Public-private partnerships, in particular, have potential for service delivery, but serious problems can arise if they’re not properly structured and monitored. For example, in 2008 Chicago signed a 75-year lease of its parking meters to a private company for $1.15 billion. The agreement gave the city some much-needed cash, but also could have cost them as much as $1 billion in future revenue, according to the city’s inspector general. The entire deal has been mired in controversy since it was signed.
A 2013 study published in State and Local Government Review, “Collaborative Service Delivery: What Every Local Government Manager Should Know,” examines public-private partnerships as a model for local government service delivery. The authors, Cheryl Hilvert of the nonprofit Center for Management Strategies and David Swindell of Arizona State University’s Center for Urban Innovation, examine a wide range of literature in the field and also analyze the results of a survey of city managers conducted since 1982 by the International City/County Management Association (ICMA).
Service delivery is often thought of as being purely governmental (for example, policing), managed by private interests (a contract for snow removal, for example) or left completely up to community groups or individuals. But the report identifies 10 steps between the two extremes. Among those discussed are intergovernmental agreements, grants or contracts with private firms, voucher systems, franchises and more. For journalists, understanding the benefits and risks of each option, and their use by cities, is crucial to covering these issues.
The study’s findings include:
“When structured properly, [collaborative service delivery can] have demonstrated benefits including cost savings, enhanced quantity and quality of services as well as less tangible benefits such as addressing community needs, enhancing trust between participating entities and increasing citizen support,” the researchers state in their conclusion. At the same time, it “can be problematic if not approached through formal transparent bidding/request for proposal processes and formalized agreements to begin the collaborative activity.”
To read the full study, click here. Below is some related research.
Related research: A 2013 Brown University study, “Tax Increment Financing, Economic Development Professionals and the Financialization of Urban Politics,” examines a financing method often used in projects run by public-private partnerships. In part because of the complexity of tax increment financing, it “creates a structural opening for a new kind of urban actor who is capable of acting simultaneously as an insider and an outsider: a city representative not formally tied to the city.” Such development professionals play “dual roles of stewards of municipal finance and central leaders within development initiatives,” a status that can have advantages as well as risks.
Also of interest is a 2013 study in the American Review of Public Administration, “Citizen Input in the Budget Process: When Does It Matter Most?” which examines the impact of public participation on organizational effectiveness. The researchers used survey data from state departments of transportation to examine the effectiveness of citizen input at four different stages of the budgeting process: information sharing, budget discussion, budget decision and program assessment. In certain cases citizen participation was found to be associated with higher organizational performance, and made a difference at all but the budget discussion stage.