Soon after taking office in July 2011, Jacksonville, Florida Mayor Alvin Brown established the city’s first Office of Public-Private Partnerships (PPPs) as a means to leverage greater returns from public resources by cultivating new funding sources for city initiatives, forging new partnerships with the private and nonprofit sectors, and optimizing the use of public assets and city-owned real estate.
Consistent with the office’s mission, Mayor Brown looked to the private sector for leadership of the new PPP office, ultimately appointing Renée Finley—an executive-on-loan from Florida Blue (formerly Blue Cross and Blue Shield of Florida)—in November 2011 to build the new office and set a course for PPPs in Jacksonville. In less than two years, the PPP office has already generated some significant results, including tapping approximately $7 million in direct private sector donations and grants, and approximately $2 million in identified cost savings opportunities through efficiency and competition initiatives.
Reason Foundation Director of Government Reform Leonard Gilroy interviewed Finley in April 2013 on the origins and accomplishments to date of Jacksonville’s PPP program, lessons learned along the way, and more.
Leonard Gilroy, Reason Foundation: What drove Mayor Brown's decision to launch the Office of PPPs so early in his administration?
Renée Finley, Commissioner of Public-Private Partnerships, City of Jacksonville, Florida: The concept started with the mayor and his vision to reform government. Coming into office, he was faced with a $53 million budget deficit, so he articulated a number of reform goals, one of which was to position the city government for the new economic reality that we were facing. And he had a second goal of improving the effectiveness and efficiency of government. Mayor Brown believes that we can attain more efficiency in the delivery of public services and achieve better results by leveraging the strengths of both the private and nonprofit sectors.
Gilroy: What goals did the mayor have in setting up the Office of PPPs? What were the areas of focus?
Finley: There were really four key areas of focus. The first was around optimizing assets and services, and the thought was, “how do we leverage the strengths and resources of the private and nonprofit sectors in the delivery of public services and public works?” And furthermore, he wanted to explore opportunities to leverage city assets—in particular, real estate assets—by getting them in the hands of the private sector so they can drive additional private investment for further economic development for the city.
The second area of focus was around the facilitation of private interest in economic and urban development. The third area of focus was to facilitate private support and nonprofit involvement in education and workforce development initiatives. And, the fourth area focuses on delivering partnerships that improve the quality of life for Jacksonville citizens.
Gilroy: How did you come to lead the Office?
Finley: As he looked at how to create more efficiency in government, Mayor Brown looked to the private sector and asked for key executive leadership to help supplement his cabinet. One of the large expense items of any city operation is the executive cabinet, and he felt like there was an opportunity to leverage the private sector’s knowledge and experience while reducing that budget item. So the mayor reached out to a number of private entities around the city and asked for five executives-on-loan, and one of the connections he made was to the CEO of Florida Blue. I was asked to consider the opportunity to come to the city to fill the role of the Commissioner of Public-Private Partnerships. I went through an interview process and was selected based on my background in strategy development, business development, and alliance and relationship management, as well as the entrepreneurial venture capital management role that I had played in one of our subsidiary structures. So, I was delighted to have the opportunity to fill this role for an 18-month commitment.
Gilroy: Given that you had a blank slate to work with, how did you go about setting up the Office? Where did you look for models, inspiration, etc.?
Finley: It really started with doing some research, because it’s always important to learn from others. There’s no such thing as a great, original great idea. So my office starting doing research through the National Council on Public-Private Partnerships and our own local government services partnership institute, and through them we also found the Reason Foundation. Reason was very helpful in working with us to identify best practices to help us establish a competency in PPPs, including providing us with a business case template, connecting us with experts who have direct experience in PPPs, and pointing us to specific examples of PPPs that have been successful.
And through those relationships I was put in contact with experts from all around the country. We did interviews and learned from examples in cities like Tampa (FL), Tulsa (OK), Austin (TX), Pompano Beach (FL), Cincinnati (OH), as well as from former staff from the Louisiana governor’s office and the Texas Council on Competitive Government.
From all of those examples and best practices, we put together a process that is clear about the specific areas of focus for PPPs here in Jacksonville, the functions of the office and what our role is in the delivery of PPPs. That role includes the identification of PPP opportunities, benchmarking and assessment, program design, relationship management, developing the funding mechanisms to bring the funding deal together—and ultimately the demonstration of value so that we can to document the direct investment or cost savings that from partnerships.
We needed to have a process in which the key players were at the table to help identify, assess, and prioritize opportunities for implementation. So we put together a group of ten participants—internal stakeholders—who participated in business case analysis to determine which opportunities we would actually explore. And then we had a list of external stakeholders who we met with to get their input and alignment with the initiatives, as appropriate.
I think that having a very clear process and a clear definition of roles and responsibilities—as well as the delegation of the PPP office as a facilitator and the city operations’ role as an execution arm on many of these initiatives—seemed to be very helpful.
Gilroy: Can you describe some of the accomplishments of the Office thus far?
Finley: In terms of direct private investment into city programs and initiatives, we’ve seen an influx of approximately $7 million. We worked with local companies to raise that capital, and we also engaged some of our nonprofits on the execution side, where we needed administrative support. One opportunity was the IBM Smarter Cities grant, which we were one of eight cities to receive and which also produced a recommendation on how to revitalize our Downtown urban core at no cost to our taxpayers. Another initiative is a veteran’s reintegration center. We have a large number of veterans in our community, being the most requested last port of call for the Navy. So we find that there’s a large need for veterans’ services to help veterans get reintegrated back into the community, into permanent housing and into the workforce. Another initiative is the Learn 2 Earn program, which provides an opportunity for underprivileged high school students to have access to postsecondary education for two weeks during the summer, and to have access to a paid job during that period. It exposes them to what opportunities are possible for them in college. And finally, the Summer Night Lights program was a P3 initiative for youths 16-21 years of age, which created active venues to keep youth engaged in our city parks and off the streets on weekend nights.
In terms of government efficiency, we believe we can potentially realize approximately $2 million in cost savings through our efficiency recommendations. Not all of these recommendations have been implemented, but through our business case analysis we’ve identified the potential savings. The city has now initiated procurements to move those initiatives into execution. Examples include our vehicle fleet parts outsourcing, both for the inventory and the management of fleet parts.
Additionally, we could expect cost savings in job order contracting and in fuel purchasing through the privatization of our vegetable oil conversion facility. We are assessing the possibility of allowing a private entity to run the facility and in return, we could then purchase our biodiesel at a reduced rate based on the volume of biodiesel produced.
We’ve also found about $1.2 million in new revenue sources. One new source involves our move to privatize the surplus auction process, taking it from a very manual, local market auction to an online, automated global auction process. Our early estimates indicate that we could realize an approximately 150 percent increase in revenue, which equates to approximately $300,000 in incremental, additional revenue. Another source will come from the one-time liquidation of parts, as the parts inventory and management functions are outsourced.
We are also looking at our assets. We’ve gone through the process of drafting a request for proposal for third-party assistance in doing four things: (1) identifying all of the properties that are in the city’s portfolio; (2) preparing an assessment of the value and liabilities associated with those properties; (3) developing a portfolio optimization strategy (what parcels we want to keep, what parcels we might want to divest of, and what parcels we might want to consider putting into private hands under long-term leases, etc.); and (4) establishing a process by which we would have all of this data captured and updated on a real-time basis so that it’s not a point in time assessment, but rather, an ongoing process. That’s what the RFP is designed to do, and we’ve gotten city council approval to put it out to market. It is currently under review by our procurement review committee, and it will be on the street in the very near future.
Gilroy: The Office of PPPs was recently moved from the Mayor's Office to being placed under the umbrella of the city's economic development department. What does that shift say about the future of the Office?
Finley: In think it’s a positive move in that many of our accomplishments and a lot of the direct investments coming in to date have been in the human services and quality of life space, which are certainly foundations for attracting new businesses to the community, but which are not specific to a direct economic development initiative. By having a tighter correlation with the city’s capital improvement plan and redevelopment plans, there’s a huge opportunity to leverage PPPs in that arena, to include redevelopment and capital infrastructure improvement projects. So from that standpoint it’s positive that these things are coming together. And, we’ll have the opportunity to expand significantly beyond the human services programs and do more of those infrastructure-type programs. That’s where there are probably larger opportunities to drive savings and economic value.
Gilroy: What challenges did you run into along the way?
Finley: There were a couple of challenges. First, because I was coming in from the private sector, it was a bit of a challenge to truly understand the needs of the community and develop prioritized areas of focus. Then, once we had the priorities, we needed to identify potential partners that were aligned with the mayor and his priorities.
Another lesson learned was making sure that we had good fiscal processes for how to handle the different types of financial transactions that many of these partnerships can bring. We sometimes had to deal with the tax treatment of the contributions, or the City Council appropriations process if the funds were coming into a general operating fund account. In some cases you had monies being dedicated to trusts set up within the city and in other cases you had funding going directly to nonprofits. So handling the funding mechanisms sometimes got complex.
Gilroy: What advice and lessons learned would you offer to other cities exploring the creation of centralized PPP entities?
Finley: It’s absolutely critical that it’s a function of the Mayor’s Office, so that you’re connected to top-down leadership support. The mayor has to champion it and give authority to the role to ultimately be able to execute. There must be a clear understanding of the priorities. There needs to be a process in place to have connectivity to the execution arm of the city that will in many cases be involved in the rollout or implementation of the initiatives. And there needs to be a tight fiscal management process for the flow of funds between all of the different partners.
Renée Finley has served as the Commissioner of Public-Private Partnerships for the City of Jacksonville, Florida since November 2011, an 18-month appointed position. In this role, she has been responsible for advocating and facilitating private sector and non-profit community involvement in the delivery of public services and the ownership and operation of public facilities. She is also responsible for encouraging the use of public-private partnerships to support the mayor’s priorities, as well as facilitating state, national and international initiatives and research regarding the use of public-private partnerships for the provision of public services and public facilities.
Finley was also named Vice President of Innovation and Market Research for Florida Blue in March 2013. In this role, she is responsible for promoting and enabling an enterprise-wide culture of innovation and imagination to successfully transition Florida Blue to a health solutions company. Finley has held a number of leadership positions at Florida Blue, most recently as vice president of corporate and market strategy where she was responsible for leading corporate and enterprise market strategy, integrated market intelligence and marketing planning and controllership. Finley’s other leadership positions include vice president of health business market segments; president of Incepture, a subsidiary of Florida Blue; CEO and managing director of Novitas Health, LLC., an alliance between Florida Blue and Arkansas Blue Cross and Blue Shield; a Principal for business and alliance development at Navigy, a Florida Blue subsidiary; and as director of IT strategy and architecture.
Other articles in Reason Foundation's Innovators in Action 2013 series are available online here.