P3’s Creeping into NH and Down a Slippery Slope

In a tight economy, people almost instinctively tighten up the purse strings. This is true at home and with government.

The problem with that is that regardless of the economic situation, things occasionally need to be repaired or replaced, whether it’s a leaky roof at home or an unsafe bridge on a public roadway.

The question, then, is how do you pay for something when the purse strings are tightened?

More and more, government entities are dangerously turning to public private partnerships to answer that question. A public private partnership, or P3, is basically what it sounds like: a government entity enters into an arrangement with a private corporation to complete a project. The private corporation secures funding, and the government gets the new roads, bridges and buildings it needs for a safe, functioning society.

On the surface, P3’s sound OK: the project gets done and the government doesn’t have to come up with the money to pay for it. But, don’t be hasty and judge this book by its cover. P3’s take control out of state hands, and toss it to corporations that usually have no ties to the community. In reality, the state and ultimately you — the taxpayer — will end up paying more in the long run, just as if you put something on a credit card at home. Basically, it’s a way to get something now without actually figuring out how you’re going to pay for it.

Before we go much further, we should note there are several projects in New Hampshire that are either currently in process or planning stages. One is a courthouse in Keene, which will house probate, superior and district courts. Another is a proposed full-service rest area on Interstate 93 in Hooksett, replacing the barn-like state Liquor Stores. The state is also in the process of evaluating bids for construction, and possibly operation, of state prisons.

A longstanding P3 in New Hampshire has been in the news lately. The state Liquor Commission recently agreed to a deal with a German corporation to build and run a liquor warehouse, but one of the local bidders is suing over transparency issues. Another bidder filed a protest over the way the contract was awarded. Both cases illustrate the murky nature of public private partnerships, including the often cloudy process of project bidding.

One thing the above examples show clearly is that the idea of P3’s is starting to spread in New Hampshire, as officials look to find new ways to fund projects. Each example also helps illustrate some of the problems with P3’s.

P3’s are most times complex and still costly, with the Keene courthouse being a prime example. The state will pay nearly $500,000 a year in rent over the 15 years of the deal for use of the $10.6 million facility. The state does have an option to buy in seven years for $7.5 million, but when you factor in rent it will have paid, the state would still end up paying more than $10 million for a building that will be seven years old. Age is a factor because the state will have no control over building maintenance, which is handled by the building’s owner, Courthouse LLC.

Another sticky issue with P3’s is lengthy contracts. This is the case with the rest areas project, which would include a 35-year lease. That means 35 years of the state sharing revenue with the rest area’s owner, revenue that would otherwise simply come to the state. Long term deals such as this cost the state money that could have gone towards fixing red-listed bridges and roads, educating our children or providing services to our most vulnerable citizens.

The prison system, meanwhile, brings up one of the biggest issues with P3’s: corporate control of something that belongs in public hands. Under one of the types of proposals sought by the state, a corporation would build and operate prisons in New Hampshire. Privately run prisons cost more, are far more dangerous for guards, inmates and the general public, and are immoral.  Not to mention the fact that current corrections professionals would be replaced by a transient, untrained staff paid fast food wages.

While the courthouse project is currently under way, bids for the rest areas were due this week, and the prison proposals are still being evaluated. In the later examples, the Executive Council must still approve any project.

Regardless of what happens with those projects, it’s clear P3’s will keep rearing their ugly heads here in New Hampshire, and corporations will continue to claw their way into the places they never were before.  Instead of figuring out how to fund our state’s needs, P3’s offer a perilous quick fix and chip away at the independent spirit that makes New Hampshire great.

Stay tuned.

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