Chapter 15: From trash disposal to business district: public–private partnerships behind Santa Fe, Mexico City
According to Becker and Patterson (2005), public–private partnerships (PPPs) are collaborative efforts between the public sector and for-profit or nonprofit organizations in the private sector to provide enhanced services to the public, to accelerate economic growth, or to supplement government revenues. PPPs are a long, difficult and time-consuming process; a project that uses assets usually from the public sector, for example a building, property rights or even a change in zoning, combined with certain tax benefits for public agencies, ranging from credits to actual tax relief such as land or sales tax reductions. The private sector may provide the design and development capacity along with cash or equity to finance the project (Blakely and Leigh, 2010). The profit or income is split between the public and the private parties in a variety of ways. In some cases, the financials require the private sector partners to pay a certain amount annually, while in other situations the public sector shares the risk. The dynamics of PPPs differ, depending on what purpose they are expected to serve, the degree of financial risk that is assumed by the parties (low, medium or high), the reward structure (low, medium or high), and the degree of involvement in development, operation and ownership by the respective parties. A strong positive relationship should exist between risks and rewards (higher risk for the private partner deserves a promise of higher reward).
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