Arkansas Public-Private Partnerships Part 1: Public-Private Partnership (P3) Overview


In Arkansas and other states, a Public-Private Partnership (P3) project is a design and construction project delivery method for a public project, and it encompasses operation, maintenance, and financing. Though public-private partnerships offer an alternative to fund and finance infrastructure projects, it has no relationship to municipal bonds for infrastructure, which is a new and different animal.
A P3 is an arrangement and agreement between a public entity (e.g. county or city) and a private entity (e.g. concessionaire or developer). Primarily used for large infrastructure projects, such as transportation projects and water treatment plants, the developer agrees to design, build, own, operate, maintain, and finance the project. In return, the public entity's grants the developer a fixed revenue stream – such as an availability payment - from the project for an extended period (the concession term).
A wastewater treatment plant serves as a great example: Rather than a budget-constrained county funding and financing a new plant, the developer will finance, design, build, and own the plant as well as operate and maintain it for a term of 20 years as a P3, collecting a monthly availability payment from the county for the term. At the end of the concession term, the developer transfers the plant to the county.

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