Navigating the New Era of Public-Private Partnerships in Parking and Mobility

Public-Private Partnerships, otherwise known as P3s, are not necessarily new to the world of parking and mobility. In fact, previous unsuccessful P3 partnerships created quite a controversial perception of this business model for years. However, P3s have begun seeing a resurgence within the parking and mobility space over the last ten years. Successful partnerships have proved that this model can work if applied appropriately. The details of how these partnerships are structured, the benefits and risks associated with P3s, where and how P3s can be effective, and the impact on communities are still relatively foreign to many parking and mobility professionals. So, what exactly do we need to know?

There are various descriptions of what a P3 is and how it works. A broad definition of a P3, according to the United States Department of Transportation, is that

“Public-private partnerships (P3s) are contractual agreements between a public agency and a private entity that allow for greater private participation in the delivery of projects. In transportation projects, this participation typically involves the private sector taking on additional project risks such as design, construction, finance, long-term operation, and (traffic) revenue.”

This definition applies not only to transportation but also to the parking and mobility industry. It also highlights many of the aspects included in a partnership, which will be discussed later.

In its 2025 Report Card for America’s Infrastructure, the American Society of Civil Engineers (ASCE) gave a grade of “C” to the overall infrastructure of the United States. Roads, transit, and aviation all scored a D or D+. While this is an overall improvement over previous years’ report cards, more funding and investment are needed to meet the increasing needs across the United States. The ASCE estimates a $3.6 trillion investment gap over the next 10 years, with roads and transit accounting for $832 billion of that gap. While Congress has passed legislation to provide $580 billion in infrastructure improvements, $455 billion of which will be allocated to surface transportation, a funding delta still exists. The report states, “Federal, state, and local governments should expand the use of public–private partnerships for appropriate projects and find opportunities to leverage additional financing tools.” The bottom line: increased funding and public-private partnerships are necessary to meet future needs.

As a benefit to the public sector, not only can a P3 increase funding for public infrastructure projects, but private sector companies can usually access this equity more quickly than the public authority. Private sector companies can provide specific expertise on projects that the government entity may not. Construction and engineering firms can provide innovation with the design and build, while private operators can more efficiently manage and operate the asset. Another benefit to the public entity is the transfer of risk from the public to the private sector. The risk associated with the construction, maintenance, and operation of the project is shifted to the private partner, lessening the risk to taxpayers. The private partners are incentivized to deliver the project on time and budget since they assume the risk.

So why would a private sector company want to enter a P3 with a government agency if they assume most of the risk? Revenue. Revenue is the primary driver for private companies entering into P3 projects. Due to the long-term nature of most P3s, the private companies can generally expect long-term and predictable income associated with the project, especially if the operational and maintenance aspects of a P3 are a part of the agreement. Engaging in P3s can also expand a private company’s market presence and allow for more collaboration and exposure, providing potential for future projects.

With reward comes risk for a project’s public and private parties. For the public sector, there is the risk that regulation and policy changes could impact the partnership. Public opposition and misunderstanding can also impact the partnership, especially if the public perception is negative. Additionally, poorly negotiated contracts can lead to financial, operational, and long-term consequences, sometimes severe.

So, how can these risks be mitigated? First and foremost, a well-written contract outlining the responsibilities of each party and ensuring mutually beneficial terms is key. This can lead to lengthy and time-consuming negotiations, but it is crucial to a successful partnership. Engaging the public and providing transparency can help alleviate stakeholder concerns and opposition. Involving consultants who can assist in navigating the financial and operational complexities of these agreements can also help mitigate unintended risk and consequences.

P3s take many forms:

• Long-Term Lease and Concession Agreements (sometimes called land leases)
• Design-Build-Finance-Operate -Maintain (DBFOM)
• Build-Operate-Transfer (BOP)
• Classic management contracts

Design (D) and Build (B) are the core aspects of any P3, but utilizing the DB model alone may not bridge the funding gap. This is where the Finance (F) portion of the model is becoming increasingly more important. While Operate (O) and Maintain (M) add another level of complexity, these segments provide benefits such as expertise and efficiency to the project once completed. These are not all the examples of P3 contract types, and I’m sure even more will emerge as partnerships evolve. Still, they all have one thing in common: they combine and leverage the strengths and resources of public and private entities for more efficient, sustainable, and effective infrastructure development and service delivery. Long-term lease and concession agreements are generally applied to existing or ageing assets. DBFOM or components of that method can be applied to existing assets as a form of redevelopment or in a new build scenario.

One of the most well-known examples of a P3 is a Long-Term Lease and Concession Agreement, in which a private entity can operate and collect revenue from the parking facilities for a specified time limit, generally 30 to 50 years. These time limits can be shorter or longer, but the 30- to 50-year contracts are the most common. In most concession agreements, the public entity retains ownership of the assets and some of the decision-making responsibility. The concessionaire must invest capital into the assets for improvement, maintenance, expansion, or other long-term activities. Usually, there is an up-front or ongoing payment to the public entity that can be used to fund other projects outside of the parking program. In a university, these funds can be used for academic initiatives. Healthcare can use the funds to expand medical programs and services.