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Leading Market Series Digs into P3s

Credit: Rachel Kettenhofen/AZBEX

By Tasha Anderson for Arizona Builder’s Exchange

The AZBEX Leading Market Series is back again with the hot topic this month being public-private partnerships. Around 30 attendees gathered at the DoubleTree by Hilton in Tempe on Thursday, May 3rd to gain some insight into the P3 market and, in general, the P3 process.

“Public-private partnerships are not that popular in Arizona,” said AZBEX Owner Rebekah Morris as she kicked off the presentation by giving attendees a glance into the P3 market, as of the past two years, using information collected from the AZBEX Database. “We’re looking at the public entities that have active P3s… most of them have one and only one project right now.”

Morris went on to list the public entities with the most active P3 projects including City of Phoenix with five projects; Arizona State University and City of Peoria with three each; and ADOT, City of Mesa and Phoenix-Mesa Gateway Airport Authority with two projects.

Before moving on to the panel discussion, Morris also discussed her analysis of Arizona’s P3 market and the characteristics that define it, such as:

  • There are no dominant players.
  • The public-private partnership takes longer and can have an exceedingly large construction cost.
  • The project almost never ends up how it was initially proposed.
  • Selection of architects/GCs happen before the developer RFP is awarded.

The P3 Spectrum

After a glance at the market, the panel discussion began with moderator, Wylie Bearup, executive director of Del E. Webb School of Construction at ASU, introducing the speakers: Denyse Airheart, economic development director at the City of Maricopa, Kimberly Davids, general manager at The Weitz Company, and Walter Lewis, project director at Connect202 Partners.

“One of the things you’ll find this morning, the common theme, is that there is no common theme when talking about P3s. They take on different forms and the P3 world really is something of a continuum,” said Bearup before allowing the panelists to discuss each of their unique perspectives.

On one end of the P3 spectrum there is the project that allows the general contractor to also take the role of the private developer. Such is the case with The Weitz Company and the Iowa Event Center project where they not only constructed it but were in charge of hiring and training the staff as well.

Another P3 alternative, and probably the most widely known, is where the public entity owns the land and solicits Requests for Proposals from private developers. In an example given by Airheart, the City of Maricopa is currently in negotiations with private developers for the Estrella Gin Business Park and Copper Sky Commercial projects.

“We will maintain control of the land, we will do a long-term lease to the developer, but it allows us to dictate what we would like to see on the property,” said Airheart as she explained Maricopa’s P3 process and why it works for the Estrella Gin Business Park. “If it was just privately-owned property, they could rezone it and put up some more houses.”

Finally, at the other end of the spectrum, Lewis discussed the Loop 202 South Mountain Freeway and how even though they are a public-private partnership under the “P3 legislative blanket,” the project is publicly-funded by both federal and state monies, and they will be in charge of maintenance for 30 years.

Opportunities for Small Businesses

Toward the end of the presentation, a question was raised about opportunities for small business owners in the P3 market, and the panelists seemed to all agree that P3s provided a large amount of opportunity.

“P3s typically are very large in size so there’s always enough… and there’s ways to layer it and get you a portion of it,” said Davids.

“A great way for smaller businesses to get involved is through events like this and networking when you have that master developer, whoever’s going to do that initial proposal, and build those relationships,” said Airheart.

Once again, the AZBEX Leading Market Series was well received and attendees gained a deeper understanding of the variations of public-private partnerships as well as some insight into ongoing projects.

The next Leading Market Series topic will be on office development. To check out dates and topics or to register for the next event, visit: http://lms.azbex.com/

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