Getting it right

If Fort Smith is to be successful in developing amenities and infrastructure that support diversified job and wage growth in the region, public-private partnerships (P3s) will be vital.

The number of P3s has risen in the past decade. The trend is likely to continue as federal, state and local governments come under pressure politically and financially to reduce spending and size.

A disciple of P3s is Mahlon Apgar IV, founder of Baltimore-based Apgar & Co., and innovator of the successful Residential Communities Initiative that positively transformed how the U.S. military houses its members and their families.

Apgar, in a November 2011 speech to Maryland political leaders, explained that a P3 “is formed jointly by a government or quasi-governmental organization and by one or more privately owned and operated organizations to meet public needs that either partner has identified but neither can meet solely by acting alone, because of either insufficient funds or inadequate capabilities.”

In addition to a government having a clear mission and policy for engaging in P3s, Apgar said a P3 has three primary features: “(F)irst, the partners share in overall policy-making responsibilities, but the private partner manages the partnership; second, the partners share in the risks as well as rewards; and third, the private partner is selected mainly on qualifications, not price.”

The Board of Directors of the city of Fort Smith recently displayed a lack of awareness with respect to its role in a P3.

The Board has committed to just short of $3 million to help develop ball fields at Chaffee Crossing and Ben Geren Regional Park — $1.6 million for softball fields at Chaffee and around $1.25 million for fields at Ben Geren.

Prior to Tuesday’s (June 5) vote by the Board on a plan to move forward with the $1.6 million Chaffee Crossing investment, property developer Kent Blochberger delivered one of the most insightfully cautionary requests to the Board in the more than 15 years I have followed city developments.

Blochberger, who has the advantage of many years of private property dealings under his belt, encouraged the Board to “get it right” with respect to an overall parks plan.

Kind Readers should know that the recent vote by Fort Smith voters approving more than $155 million in bond refinancing and new projects could steer more than $20 million (my estimate) toward new sports fields, and parks maintenance and new construction. But there is no overarching plan, mission, or purpose announced for the parks segment of the money to spent.

Blochberger praised the Board’s effort to capture voter approval for the funds, and noted that now the city for the first time in its history has the opportunity to develop a “strategic parks plan” instead of just doing enough to get by. Blochberger said access to adequate funding creates a greater necessity to consider the best use of such funds. While being careful to say he was not against the ball fields at Chaffee and Ben Geren, Blochberger asked the Board to “slow down and get it right.”

He suggested to the Board that the $1.6 million Chaffee proposal does not fully address the scope and specifications of the project. “In other words – What does the $1.6 million dollars buy? Does it include restrooms, concessions stands, maintenance building, utilities, parking, etc.,” Blochberger noted.

And with the Chaffee Crossing fields’ operating budget eventually showing a profit of $200,000, Blochberger asked the Board a few basic questions: “Who controls that money? Are there any restrictions on how that money can be spent? Could those profits be transferred to another entity?”

He also said the proposal does not answer questions related to future use and costs. He noted that if the $1.6 million doesn’t fully fund the effort, will the city be placed in a potentially no-win position to provide more funding or see its $1.6 million lie fallow?

“It seems the city is being rushed into a decision before all of these questions are answered. Let’s slow down and get it right. … Instead of rushing to a vote, I had hoped that the Board and the Parks Commission would have created a strategic plan for the city’s parks and recreation needs. It seems that planning is not a priority, but it should be,” Blochberger wrote in his speaking notes. “I believe that the citizens want a well thought out plan where organizations would respond to the city’s plan — instead of the city responding to a non-profit’s plan.”

The seven members of the Fort Smith Board of Directors looked at Blochberger as if he had four heads.

Lee Webb, one of the project leaders for the Chaffee Crossing project, told the Board that Blochberger’s questions had all been raised during the months leading up to the election. That was only half true. They had been raised, but not answered.

While there has been much Board discussion of ball fields in the past year or more, it rarely moved beyond the superficial. It was as if everyone involved feared the details would spoil the deal.

But the details could spoil the deal.

The ongoing partnerships and future partnerships will require voter support. The trust of voters will require careful consideration and oversight of fiscal and physical agreements between governments and private actors. The 1% prepared food tax debacle related to the Fort Smith Convention Center should be a fresh reminder of the necessary relationship between adequate oversight and voter trust.

“It appears that the city does not have a clear picture of what is included for the $1.6 million dollar investment, nor does it have an operating agreement to review,” Blochberger wrote in his speaking notes. “In addition, a recent article indicated that it was undecided on who would be responsible for mowing the acreage being developed. There are too many unanswered questions to move forward. With the new funding for parks and recreation, it is a new day in Fort Smith. This is a wonderful opportunity to get it right.”

Blochberger echos the warnings of Apgar, who cites the following as the five main reasons for P3 failure:
• First, when they do not clearly define desired outcomes and performance measures from the start;
• Second, when they don’t engage all the major stakeholders – customers, regulators, constituents, suppliers – in planning and decision-making;
• Third, when their business models lack direct revenue streams to underpin their economics, or direct links between the rewards they produce with the risks they entail;
• Fourth, when the deck is stacked in favor of one partner or the other; and,
• Fifth, when the partners rely on contracts for guidance rather than the purpose and sprit that brought them together.

Indeed, as Blochberger noted, these are good times for the city’s parks department, but it is in the good times that officials must be most careful to consider and preserve the trust of future voters. We do neither the public or private sector a favor when we sacrifice the interests of one for the other.

This essay may be an exercise in futility considering the past few years of Fort Smith political leadership at the municipal level. But there is, even in my cynical soul, the hope that, as Blochberger encouraged, city officials will eventually do what it takes to “get it right.”