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P3s for Social Impact

Albert E. Dotson, Jr. & Eric Singer

Government agencies at all levels are increasingly turning to public-private partnerships (P3s) for the delivery of new public infrastructure.  However, the discussion often focuses exclusively on transportation infrastructure, including roads, bridges, and mass transit.  This focus is understandable: throughout the country, government transportation agencies, such as the Florida Department of Transportation, have been on the cutting edge of P3s and have many successful projects to show for it.  In addition, our nation’s transportation infrastructure needs are severe and wide-ranging.  However, the focus on transportation infrastructure short-changes the flexibility and benefit of the P3 model, which can be used to develop and operate many types of infrastructure, including social infrastructure.

Florida’s authorizing statute for P3s is incredibly broad and authorizes P3 proposals for a wide variety of social infrastructure, including medical facilities, schools, and recreational facilities.  For example, Monroe County recently utilized the statute to develop and operate an animal-control shelter in Key West using the P3 model, and the City of St. Augustine recently received an unsolicited P3 proposal for the construction and operation of a community health clinic for local veterans. The sky is the limit.

In addition, many government agencies are exploring a new type of performance-based P3 investment called a social impact bond.  Social impact bonds were first used in the UK earlier this decade and have spread to the U.S. over the past few years. With a social impact bond, the government pays for particular social outcomes instead of infrastructure.  For example, the government could issue a social impact bond that pays a specified amount for private interventions that provide a measurable decrease in prisoner recidivism, and the amount paid would be based on the government’s savings from reduced recidivism.  In addition to recidivism, social impact bonds have been used for reductions in homelessness, early child education,  and health care.  The model encourages innovation in the private sector for the achievement of beneficial social outcomes and ensures that the public sector only pays for actual successes.

Although P3s will continue to serve an important role for the provision of transportation infrastructure and other traditional public facilities, P3s can play an important role in the provision of social infrastructure and social services.  The model is flexible, encourages creativity, and can be adapted to achieve nearly any social good.

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