Privatization and Government Reform Newsletter (Issue 37, July 2019 Edition)
ID 151474593 © Allan Ignaczak | Dreamstime.com

Privatization and Government Reform Newsletter

Privatization and Government Reform Newsletter (Issue 37, July 2019 Edition)

Financing major infrastructure projects, reconfiguring NASA to better utilize the private sector, parking in Nashville, technology in California and more.

In this issue:

  • ANNUAL PRIVATIZATION REPORT: Transportation Finance Chapter by Robert Poole
  • REIMAGINING NASA: Study Outlines How to Commercialize Space Program
  • REGULATION: Alcohol Control States Face Chances to Modernize
  • ENERGY: Jacksonville Mulls Privatizing Electric-Water Utility
  • PAY FOR SUCCESS: Health, Homelessness, Addiction, Youth, and Stormwater Programs Develop
  • K-12 SCHOOLS: Maryland County Eyes Long-Term PPP
  • CRIMINAL JUSTICE: Unintended Consequences of Parole

MAIN ARTICLES

Annual Privatization Report 2019: Transportation Finance

Reason Foundation recently released the sections of its Annual Privatization Report 2019, covering transportation finance. Authored by Reason’s Robert Poole, the section provides an overview of the major deals and events relating to the private sector’s involvement in delivering critical ground and air transportation infrastructure across the globe.

» Annual Privatization Report 2019: Transportation Finance

Space Commercialization Study Details How to Reconfigure NASA’s Role 

In June, Reason Foundation published the study, “The Economics of Space: An Industry Ready to Launch,” by space transport industry veterans Jeff Greason and Jeff Greason and James C. Bennett. While the authors praise NASA for its willingness to embrace public-private partnerships (PPPs) and openness to private sector innovation, they see loads of untapped potential for commercial activity, including asteroid mining, clean energy generation, using water sources in space for fuel and radiation shielding, and utilizing the benefits of low gravity for manufacturing and research purposes

Transitioning NASA’s role to achieve such lofty goals would require substantial changes, including continuing and increased use of PPPs, but as the authors argue, the changes appear to be achievable within two decades using NASA’s current budget allocations.

» FULL PAPER

NC Bills Look to Ease Alcohol Restrictions

Lawmakers in North Carolina have introduced a pair of bills (HB 971 and HB 536) that would work to modernize and liberalize the state’s alcohol control: One by ending government wholesale and retail monopolies on liquor, and the other by removing various archaic and needless restrictions on liquor and other alcoholic beverages. While both bills bring needed reforms, high taxes in the legislation would all but ensure lower prices won’t accompany the welcome competition, Reason’s Austill Stuart writes in a recent article.

» FULL ARTICLE

Nashville Rejects Parking Privatization Deal, Setting Battle Lines for Mayoral Election

Nashville Mayor David Briley recently withdrew a proposed 30-year, $325 million lease agreement with LAZ Parking to upgrade and expand the city’s street parking operations. Councilmember John Cooper cited the deal as the “last straw,” drawing him to run against Briley in the mayoral race. In a new article, Reason’s Austill Stuart explains why Nashville’s best path to modernizing and upgrading street parking would likely include heavy private sector participation.

» FULL ARTICLE

Silicon Valley Key to Fixing California Data Problems

California’s Silicon Valley is universally considered the most tech-intensive centers on Earth, but California’s state government has been plagued for years with technology problems and often works very slowly to fix them. In a recent San Jose Mercury-News article, Reason’s Marc Joffe explores how Silicon Valley and Sacramento can work together to better overcome the state government’s technology challenges.

» FULL ARTICLE

NEWS and NOTES

Jacksonville Public Utility Board Considers Privatization: In late July, Jacksonville.com reported that the board of directors for the Jacksonville Electric Authority (JEA) voted in favor of exploring privatization of the city government-owned electricity and water utility, which was first established in 1895. While no timeline has been assigned for a future competitive sourcing activity, the vote gives a green light for one to be determined. While whispers of JEA’s privatization have loomed for a couple of years, the vote represents the city’s first major step toward privatizing the utility.

Prince George’s County Public Schools Releases RFQ: In late May, Prince George’s County, located across the Potomac River from D.C., released a request for qualifications (RFQ) for a PPP calling for the construction, finance, and maintenance of the county’s schools, which need an estimated $8.5 billion in capital investment over the next two decades for construction, expansion, modernization, and repairs. While more details will be available when an upcoming request for proposals (RFP) is released, the county looks to enter a roughly 30-year concession agreement where the private partner will handle design, new construction/remodeling, and maintenance.

NYC Releases Health Care Pay for Success RFP: As a part of the city’s NYC Care program, which seeks to guarantee comprehensive health care to all local residents, the office of New York City Mayor Bill DeBlasio released an RFP for the program in May, seeking community organizations to help steer uninsured Bronx residents into NYC Care, providing per-staff funding of $30,000 for costs over a six-month period, and rewarding bonuses for high performance. After a late June deadline, the city is currently evaluating proposals.

Report Finds Unintended Consequences From Parole and Probation: A new report released in May jointly by the Council of State Governments’ Justice Center and Arnold Ventures highlights a glaring problem in many states’ parole programs: They’re contributing to prison overcrowding, despite intentions for such programs to reduce time behind bars. Using survey data provided by 46 states, its authors concluded that 45 percent of state prison admissions resulted from a combination of probation and parole offenses (23 percent) and “technical violations,” (22 percent) which include missing appointments and failing drug tests. Idaho (62 percent), Arkansas (54 percent), Missouri (54 percent), and Wisconsin (52 percent) keep a majority of such inmates among their populations, while Massachusetts (<1 percent), Alabama (2 percent), Michigan (4 percent), and Maryland (4 percent) were found to have the lowest rates. The report includes easily accessible in-depth data for each state and concludes with a set of questions for lawmakers and officials to improve on probation and parole practices that cost states over $9 billion per year.

Pennsylvania Bill Allows Alcohol Pricing Flexibility: Pennsylvania, like North Carolina, remains a liquor control state, having only recently passed measures to liberalize some of the country’s most Byzantine alcohol control laws. HB 1512 allows the state’s alcohol control board to consider demand when setting prices for alcoholic beverages, by allowing the board to “price its best-selling items and limited purchase items in a manner that maximizes the return on the sale of those items.” Currently (and since Prohibition’s repeal), “prices shall be proportional with prices paid by the board to its suppliers and may include a handling fee.” By introducing the new flexibility, the board could choose to adjust prices based on consumer expectations, raising them for highly demanded items and providing discounts to more quickly overturn inventory.

Gov. Stitt Signs Oklahoma Pay-For-Success Legislation: In late April, Oklahoma Gov. Kevin Stitt signed HB 2670, which allows all state agencies to enter Pay-For-Success (PFS) arrangements, while also establishing a “Pay for Success Innovation Fund” consisting of monies dedicated to administering state PFS programs. The act takes effect in November. As mentioned in Reason Foundation’s Annual Privatization Report: State Government Privatization, in 2017 Oklahoma established its first PFS venture, which looks to help divert women with nonviolent drug offenses from prison into a treatment program, with success hinging on reducing recidivism among offenders completing the program.

Great Lakes Region Org Seeks Stormwater Pay For Success Programs: In May, P3GreatLakes Initiative released a request for a statement of interest (RSI), challenging nearby communities to finance green stormwater infrastructure through Environmental Impact Bonds (EIB). Comprising academic, government, and private sector leaders, the Initiative targets regional water, stormwater, and wastewater infrastructure improvement through alternate financing and decentralized management. P3GreatLakes).  The RSI, developed in collaboration with a grant from the Great Lakes Protection Fund and professional firms Environmental Consulting & Technology, Quantified Ventures, and Corvias, seeks two communities in states bordering the Great Lakes (Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, and Wisconsin) to begin EIB programs to finance green stormwater infrastructure. A type of social impact bond, EIBs reward successful investors for meeting agreed-upon terms of success tied to meeting environmental goals. Responses to the request were due in mid-July.

Denver Youth PFS Program Announced: In late April, the University of Denver’s Center for Effective Interventions (CEI) announced a new pay-for-success (PFS) program meant to target underserved area youths ages 12–17 years-old and their families. Using an intervention approach called “Multisystemic Therapy” (MST), the school will work with the state and area organizations to develop individualized treatment plans for targeted individuals and families. While resource-intensive, requiring a team of three to four therapists and a supervisor working each case, CEI Executive Director Sue Kerns hopes to serve 600 families over the next three years with $2.3 million in funding, and after full implementation of MST, at about one-fourth the cost per case.

Denver Cites Early Successes of Homelessness PFS Program: An April press release for a new comprehensive strategic plan to combat homelessness in the Denver area included early praise for its homelessness social impact bond (SIB) program, the first in the country. Two years into the program, 85 percent of its 285 participants remain in stable housing. In contrast, a concurrently released audit report faults Denver’s Road Home, the city division responsible for overseeing homelessness. The report found the division incapable of fulfilling its duties without a larger strategic vision, specific citywide performance metrics, and sufficient bylaws that address conflicts of interest. The authors praised the SIB program for developing an online dashboard tool that provides SIB stakeholders with monthly updates on the program’s participants while lamenting that Road Home lacks “such a tool to track and communicate the status of all programs and services provided to homeless individuals in Denver.”

Hawaii Governor Vetoes Bill Creating State Harbor PPP Pilot: Hawaii HB 1032, which establishes a five-year lease pilot program for the state-owned Manele Boat Harbor located on the island of Lanai, passed both legislative chambers in April, but was vetoed by Gov. David Ige in early July. Officials chose the Lanai harbor due to popular support for developing the harbor, saying the PPP model would bring improvements more quickly and cost-effectively. The legislation compels the state’s Board of Land and Natural Resources to report back to the legislature annually from 2022 through 2024 on whether the program should be canceled, extended, or modified.

Howard County, Maryland Launches Addiction PFS Program: In order to better help area residents struggling with addiction, Howard County (located southwest of Baltimore) will work with Delphi Behavioral Health Group in a $3 million PPP pilot whereby the company will operate a residential treatment center that serves all  citizens regardless of income, Dephi noted in a  May press release.

QUOTABLE QUOTES

“If we don’t think about creative funding streams, we’re probably never going to make these services widely available…So for those of us in universities who struggle with that reality, to be able to be thought partners and participate in these types of initiatives is a tremendous opportunity.”

– Sue Kerns, executive director of the University of Denver’s Center for Effective Intervention, referring to the school research center’s participation in a new PFS program for underserved youths in the Denver area

“With the help of Delphi Behavioral Health Group, this facility will be able to serve as the anchor of our community, maximizing the effectiveness of all our other efforts to support residents currently struggling with substance abuse, including prevention, outpatient treatment, and recovery…Likewise, we will also continue to alleviate pressure on our emergency rooms by ensuring that all individuals suffering from substance misuse are immediately referred to the appropriate provider.”

– Howard County (Maryland) Executive Calvin Ball, quoted in a press release announcing the county’s new addiction and recovery PPP with Delphi

“This measure would provide the Department with more flexibility and options to upgrade and improve state boating facilities in a timely manner, to the benefit of boaters and the public.”

–Hawaii Department of Land and Natural Resources, in a press release referring to HB 1032, which would have established a PPP for its state-owned port on the island of Lanai

Austill Stuart is a policy analyst at Reason Foundation, a non-profit think tank advancing free minds and free markets.