Innovators in Action: Innovation and the Future of Public-Private Partnerships in Centennial, Colorado

The latest interview in Reason Foundation’s Innovators in Action 2013 series is the second of a two-part series focusing on the contract city of Centennial, Colorado, a Denver-area suburb of more than 100,000 residents that incorporated in 2001 and has gained increasing recognition in public administration circles as a leader in innovative government efficiency and privatization initiatives.

Since incorporation, the city has pursued a “contract city” policy of contracting with outside providers for most public services, and in 2008, Centennial launched what has become its most recognized achievement: a large-scale, full-scope public-private partnership (PPP) with national engineering firm CH2M HILL to provide all of the city’s public works services. In Part 1 of our Centennial feature last month, we interviewed Centennial Mayor Cathy Noon and City Manager John Danielson on the city’s approach to maintaining a lean government through smart contracting and using public-private partnerships to help drive performance across the entire city government.

In Part 2 of our Centennial feature, we turn to the topic of the city’s forward-thinking approach to driving innovation in government. Centennial is one of a growing number of cities that have created a formal senior administrative position—the chief innovation officer—within the city government with the primary responsibility of driving public sector innovation. This role typically sits apart from the traditional departments and divisions so that it can have an enterprise-wide scope and think outside the traditional organizational silos. The deployment of cutting-edge technologies and partnerships with external service providers and community organizations are often key focus areas.

Centennial’s Chief Innovation Officer David Zelenok has a unique perspective on both innovation and partnerships, and the intersections between them. As the city’s former public works director, he served as the city’s lead player in developing its award-winning public works contract—so successfully that he eliminated the need for his own position, which was abolished—before ultimately transitioning into his current role as the city’s innovation change agent. I interviewed Zelenok earlier this month on the role of the chief innovation officer in government, the importance of sharing both risks and rewards in PPPs, emerging future opportunities in PPPs that mid-size cities can explore, and much, much more.

Here’s an excerpt:

Leonard Gilroy, Reason Foundation: The position of chief innovation officer is a relatively new position in the world of public administration. Can you describe your role, both in terms of its position in the enterprise and how you approach it in terms of the scope and breadth of responsibilities?

David Zelenok, Chief Innovation Officer, City of Centennial, Colorado: In terms of the organization, I report to the city government’s chief executive, which here is our City Manager John Danielson. That was done deliberately, in part because my role is intentionally not a part of any of the city’s other departments, so I’m not a part of planning, public works, the court system or the clerk’s office, for example.

My role is really the chief advocate for innovation within the organization, but beyond that it’s instilling a culture of “thinking outside the box” in the organization, as well as seeking new opportunities not just for cost savings or cost avoidance, but also revenues, and that often leads us into partnerships and unique ways of structuring or restructuring the basic functions of our government.

And very often we find that the conventional approaches that have been used both here and in other cities might be outdated technologically or may have been surpassed by legislation at a variety of levels.

Gilroy: Some public administration experts have lauded the development of the chief innovation officer role, but have questioned whether cities have empowered it with sufficient authority, both in terms of direct budget controls and decision-making authority. How would you respond to this concern? How can cities maximize the value of their chief innovation officers?

Zelenok: Looking across the country, many cities that think of themselves as “leaning forward” have appointed these chief innovation officers. A lot of major cities are now doing this, and media outlets like CNNMoney and Government Technology are starting to cover it.

First and foremost, the emphasis of the job is to advocate for new, innovative and creative ways to avoid costs and to enhance revenues. At the most basic level—just in terms of covering my own costs as an employee—our city manager has given me a challenge to come back with what some places call a “benefit-cost” or “value-for-money” ratio of 20 to one, meaning benefits at least twenty times the cost. So he’s asking that I at least recapture the expenses of the job many times over. And I was pleased to report back by the end of the first month that I had already positioned the city to bring in a combination of revenues and infrastructure improvements exceeding 20 times my salary for the year.

Part of maximizing the value of the CIO role really hinges on the level of the position. If the position is buried deep within the organization, then their influence will only go as far as their peers or counterparts inside that department. So I think that organizational placement is a major part of it, having a single point of contact for innovation, both in terms of moving projects forward and then instilling that culture of innovation in the organization. These creative, innovative ideas really need an advocate in the government at a high level that can push them forward and restructure or look outside of the conventional ways of delivering services.

It’s also important to focus on efforts where the benefits outweigh the costs. In some cases, there may be an opportunity to create a partnership with another government or quasi-governmental authorities. Right now we’re in the process of structuring a partnership with a metropolitan district—a quasi-governmental authority—to have them perform $8 million of improvements on our city streets with their money. Ultimately the money will benefit the district, but for us, if they’re committing $8 million into widening our streets and adding in new roundabouts to improve traffic flow, reduce congestion, and improve safety, then we win, the district wins, and the businesses that support that district with their own funding win because they see improvements in congestion.

The bottom line is that we think that everything that government does in this arena needs to have a quantifiable objective or subjective benefit that outweighs the cost of doing it. That’s the first rule of business that we look at—it has to be worth doing financially and economically, and it has to benefit the community.

Definitely check out the full interview here. Zelenok goes on to discuss a range of topics that include the city’s successful PPP for public works (and the story of its initial procurement), lessons other cities can learn from Centennial, and more. Of particular interest for current public administrators will be Zelenok’s discussion of some of the emerging PPP opportunities that Centennial is exploring in areas like street lighting, traffic signal operations, and fiber optics/telecom. Zelenok offers cutting-edge thinking in each of these areas that blends partnerships with technological modernization and could serve as a model for many other cities, large and small.

Other articles featured in the Innovators in Action 2013 series are available here.