Out of Control Policy Blog

Guam to Privatize 13,000 Streetlights

Guam is privatizing its 13,000 streetlights:

The Department of Public Works is planning to start the bidding process to privatize Guam's 13,000 streetlights before the end of the month.

Director Larry Perez says privatization is a better way to efficiently manage streetlight service. Currently, he mentions that village mayors, the Camacho administration and lawmakers collaborate in deciding how this service is managed. Often time, Perez says it leads to long term problems. He adds that DPW is looking for a contract with a profit-oriented company that can manage streetlights for less than the $3.2 million dollars alloted every year from the Government of Guam.

It's not clear at this point what form the arrangement might take. Many jurisdictions in the U.S. routinely contract out for the maintenance of streetlight systems, but the United Kindom has taken it much further by extending the model to include private sector financing of streetlight system modernization projects.

The latter type of arrangement is somewhat analagous to the "availability payment" model we're seeing on the I-595 express toll lanes project in Ft. Lauderdale, in which the private sector finances the renovation/replacement/upgrade upfront and then maintains the system for a few decades as it gets repaid in small, annual increments (for making the upgraded system "available") by the government partner. As the U.K.'s Public Service Review notes:

Using the PFI or a Public Private Partnership (PPP) for street lighting provision allows a local authority to obtain investment by a service provider for better and more efficient apparatus in order to improve the safety and performance of the street lighting service. The 'spend to save' benefits of this approach, together with the benefits of procuring the whole service rather than the individual components, demonstrates that procurement through the PFI or a partnership route is a better way to optimise whole life costs and service delivery.

As local government budgets continue to tighten, I'd expect that more and more U.S. cities will start to take note of such developments and realize that there are more options available to them than just the tired, old tax-financed delivery methods they're used to.

Leonard Gilroy is Director of Government Reform


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