Maryland school district turns to P3s to tackle $8.5B backlog

Dive Brief:

Prince George’s County, Maryland, officials say they’re going to use use public-private partnerships (P3s) to help address an $8.5 billion backlog of public school construction and maintenance projects.
County Executive Angela Alsobrooks said using a P3 model would save approximately $180 million by turning over the construction, maintenance and financing duties to the private sector. Alsobrooks said this approach would allow the county to build 18 schools in seven years. The county, according to The Washington Post, plans on using one company to perform all the work and will begin reimbursements to that contractor as students occupy each new building.
The Maryland state legislature passed a bill establishing a framework for how the state would contribute to the program, but county officials will have to wait until next year to seek funding. Regardless of the state’s actions, the county will invest $25 million to $30 million annually into school construction projects for the next 30 years. The county believes schools will be built 14 years faster using a P3 and for 15% to 20% cheaper.

Dive Insight:

The county could start work on as many as seven schools this fall using a P3 model. The move toward P3s, The Post reported, comes at a time when the school district is dealing with aging facilities. P3s in use on state projects like the Purple Line light-rail system and the Capital Beltway and Interstate 270 expansion could also have inspired the school district to go in this direction.

If Congress passes the Public Renewals Act of 2019, a bill that is now under review by the Senate Finance Committee, school districts around the country could also be using more P3s to address their construction needs.

The measure would allow a variety of facilities, for the first time, to use tax-exempt, private activity bonds (PABs) to finance their projects, Facility Executive reported. The $5 billion authorized in the bill would likely attract the private sector and serve as an additional financing option for cash-strapped agencies. The bill opens up PAB financing as a possibility not only for K-12 schools but also for college and university buildings, libraries, courthouses, healthcare and related research facilities, public safety buildings and government employee offices.

Universities are already using the P3 model, although without the benefit of PABs. The University of California Merced’s $1.3 billion P3-driven expansion is one of them. When all phases are complete, the campus will be twice its original size, allowing the university to serve more students. Plenary Properties Merced is the university’s P3 partner.