Public-private partnership to result in accelerated building of six new schools
Although common in U.S. higher education as well as for K-12 schools in other countries, public-private partnerships have not been used by U.S. school districts in the construction and maintenance of new school buildings—until now.
Prince George’s County, Maryland, which is experiencing increasing housing demand and job growth, has a strong need for additional K-12 schools to meet projected enrollment numbers and ease overcrowding. Plus, more than half of Prince George’s County Public Schools are over 50 years old, and upkeep is costly.
District leaders have embarked on a $1.24 billion agreement to accelerate the delivery and maintenance of six new, urgently needed schools. It’s the first-ever K-12 schools Public-Private Partnership (P3) Concession Agreement in the United States.
The deal forms Prince George’s County Education and Community Partners (PGCECP) as the design-build-finance-maintain partner. The entity will be responsible for building the schools by 2023, and then maintaining and renewing them for 30 years. The schools are guaranteed 15 years of useful life remaining on all major building systems, including roofs, HVAC, electric and plumbing.
PGCECP includes Fengate Capital Management Ltd. and Gilbane Development Co. leading the development, Gilbane Building Co. leading construction, Stantec leading design and Honeywell providing maintenance services.
“P3s for schools have been used for many years in other countries around the world, and I think that in the U.S. there have been a lot of eyes on this project to see if it can be done successfully here,” says Bob Hunt, managing director of public institutions for JLL, which served as the technical and financial advisor to the school district, assisting from strategy to closing. “Now that PGCPS has stepped out and successfully closed a deal, we certainly expect other schools districts in the U.S. to follow suit—particularly those who have a strong need for enhanced long-term facilities maintenance and expedient new school delivery while maintaining budget certainty.”
Without the agreement in place, Hunt believes it would take more than 15 years for the needed schools to get funded and built.
Such agreements can be a solution for districts nationwide who are facing the impact of pandemic-related burdens on municipal budgets, says Lindsay Stowell, executive vice president of public institutions for JLL.
As with other creative ideas implemented because of COVID, P3s haven’t been part of finance and construction of school buildings for many reasons. “I think that the hesitation is likely multi-faceted,” says Stowell. School leaders have a general aversion to private-sector financing and operations in public schools. Another issue, she adds, are concerns related to new Financial Accounting Standards Board rules and the impact on how payments should be treated by finance departments.
Stowell points to the “domino effect” that deferred building maintenance has on facility infrastructure as a big financial problem for school districts, and an attractive reason to pursue P3s. “This P3,” she says, “eliminates that concern and promises institutional pride for many years to come.”
Melissa Ezarik is senior managing editor of DA.Prince George’s County Public Schools in Maryland has closed on the first-ever K-12 schools Public-Private Partnership (P3) Concession Agreement in the United States. Other districts are watching. Click To Tweet