LA Local Business: When Public and Private Sectors Meet

The Montage Hotel in Beverly Hills was awarded Gold LEED (Leadership in Energy and Environmental Design) certification. Despite its eco-friendly status, the hotel and its construction had been a source of irritation to some members of the Beverly Hills community. They insisted that it was going to increase traffic in the area. There was even a measure on the ballot of local elections for the project. But something great actually came out of all the squabbling: a public park and sitting area. The Athens Group—the private group that owns the hotel—was required to build this public space in order to receive clearance for its newest property.

This is the perfect example of the kind of public and private sector collaborations that seem to be gaining popularity, nationally and locally. Technically speaking, these partnerships are called P3s (or PPPs). They are government services or private businesses funded and operated through collaborations between the government and one or more companies in the private sector.

Not everyone is excited about the merging of public and private—as we’ve seen on the national stage. One thing is for sure: this issue is not going away—locally or beyond. In February, the California senate signed Bill 4 into law, allowing its state transportation department and regional transportation agencies to enter into unlimited transportation P3s between now and January 1, 2017. Before, there had been a limitation date of January 1, 2012.

Pros of Public and Private Partnerships:

• Hefty economic and social benefits to the community of getting something built years sooner
• P3 projects tend to skew more environmentally conscious

Cons of Public and Private Partnerships:

• Some P3 opponents say they favor drawing people to move into cities where they are subject to expenses that favor the wealthier
• P3s can socialize risk and privatize the profit

P3s and the Green Factor

A current example of a large-scale P3 is the collaboration between the Los Angeles County Metropolitan Transportation Authority (Metro) and California-based Chevron Energy Solutions. It shows how P3s and greening initiatives can work well together.

Metro and Chevron just unveiled the largest solar panel installation in the city last month—a new 1.2 megawatt solar panel system at Metro’s Support Service Center in Downtown. The project promises to cut the facility’s annual energy bill in half according to projections. Chevron is providing long-term oversight of the facility’s solar panel and new equipment.

The “Other P” in P3s: People

It’s not just property partnerships that fit into the P3 arena. It’s the combining of energies and expertise from each of those areas to produce greater results, ideally for the greater good. This involves people power as well.

For example, earlier this year, Dan Rosenfeld, who co-founded the Downtown LA development firm Urban Partners, left his company to enter the public sector. He now serves as planning deputy for County Supervisor Mark Ridley-Thomas. It’s not the first time Rosenfeld delved into public service. During the ‘90s, he managed real state for the state of California and then for the city of Los Angeles.

Older Examples of California’s P3 Partnerships:

• California Fuel Cell Partnership (CaFCP), Sacramento, CA
• State Route 125, San Diego, CA
• Riverside County Library System, Riverside, CA
• Owens Valley Project, Los Angeles, CA

Clearly, the private sector can learn a thing or two about community needs, ecological welfare and tight budgeting from the public sector. And the public sector can gain from the business-savvy field expertise and connections that the private sector has to offer. With California’s budget crisis delaying much-needed public works and requiring innovation, we may well be seeing more and more of these sorts of ventures in-State and in LA in the near future.