3 Keys To Closing A Successful Public/Private Partnership

Transaction negotiations between public and private agencies come with a distinct array of challenges. Public sector deals are often focused on projects that meet the needs of public stakeholders rather than generating maximum revenue. To close a deal involving public agency property takes skillful and patient attorneys, and developers and owners who understand these needs and how they are involved in a transaction.

Bijal Patel, of counsel with San Francisco-based Lubin Olson's Real Estate and Land Use Practice Groups, reviews three key elements required to create healthy public-private partnerships (P3).

1. Clarifying The Public Agency’s Goals

In the public sector, it’s critical to remember financial return is important, but is rarely the top priority. Developers need to understand a public agency’s particular motivations and aims, addressing the public stakeholder and agency’s goals for the transaction. Depending on the jurisdiction, stakeholders can have significant involvement and input in a project approval process, and the agency's goals often reflect this stakeholder input. In these cases, the agency will often focus on including public amenities, such as trails, parks or a rehabilitated waterfront asset. These agencies are usually looking to private developers to help complete the transactions, and develop and maintain the public land.

2. Making Note Of Transaction Structure

Every public agency transaction structure is different, and similar goals within an organization can take different forms. There are unique documents involved in documenting P3 relationships with the public sector, but there exist best practices provisions commonly found in P3 transactions in addition to specific agency requirements.

“All of the unique aspects of a public transaction look very different from the private sector,” Patel said. “Some transactions are very similar in terms of deal particulars, but are ultimately different in terms of documentation.”

3. Establishing Relationships

Mutual respect is the name of the game. People on both sides of a private sector transaction size each other up; it’s human nature. Each side wants to know who is on the other side of the deal. It’s no different in the public sector; each party needs to know the other’s career and educational qualifications. The individual attorneys, developers, owners and stakeholders on each side, and the vested interest each side has in the deal, matter.

A public government agency will not often respond well to the hard-charging, private sector attorney whose goal is to win the case; it will want a private partner team that understands the agency’s goals—and can compromise where needed to satisfy public goals. Attorneys who have worked on both sides can prove especially effective in negotiations with the public sector, and can make a tremendous difference in representing a private developer to reach a final deal with a public agency.

Patel has curated a career working on both sides. Having served as a deputy director on the business side of the Santa Clara Valley Transportation Authority as well as deputy city attorney for the City and County of San Francisco—while having expertise representing private sector clients—she knows how to navigate both waters, which clients recognize and value. 

“Both sides want to know that I can compromise and understand public agency goals,” she said. “When I look at a deal, I look comprehensively, not just narrowly in terms of documentation needs. And this gives me credibility.”

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