Today, any public policy approach must include measures and metrics to guide choices. The difficulty is often around how to craft a common set of measures for vastly different projects. This is particularly true for joint-venture and public-private partnership projects (P3), where each project may have fundamentally different goals and be located in different communities and neighborhoods.
Public-private partnerships (P3s), or more broadly joint-venture real estate developments, are an integral part of Fairfax County’s adopted Economic Success Strategic Plan. While Fairfax County has pursued these types of projects for 30+ years, P3 projects were often viewed as ‘one-time’ projects with ‘one-off’ goals established relative to a specific opportunity. Linking these projects to the community’s strategic vision, priorities and accompanying measures or metrics in a comprehensive way was an afterthought, if they were considered at all.
The process involved in creating measures should be viewed as the tool that can empower leaders to communicate a clear-cut path to implement the community’s strategic vision, goals and priorities. The process of developing measures is often more important than the actual measures themselves. It can bolster community trust and confidence in local government officials, resulting in increased “permission” to pursue more aggressive and dynamic community building opportunities, such as public-private partnerships (P3s) and joint ventures.
Due to a significant increase in the number of projects over the past ten years, Fairfax realized that a more strategic and intentional approach for evaluating projects was necessary. We stumbled, as many jurisdictions often do, looking for specific measures and metrics. We used previous project measures and reviewed standard industry metrics for real estate development. In the end, we encountered many of the issues that Dr. Adam Eckerd, raised in search of the “few optimal metrics”. Of particular difficulty, was that measures and goals are different for every P3 project and the community it’s embedded in. Political, end user, and stakeholder perspectives can vary widely depending on the project and community.
Fairfax developed a general framework, which can adapt to all county P3 projects. It’s based upon defining three principle outcomes that Fairfax seeks to achieve by participating in joint-venture/P3 projects. Every project should have at least one of these elements:
1. Create Economic Value for the County and our partners: This principle is focused on generating revenue that inures to the County’s benefit. We’re also interested in creating value for our partners. Some projects are focused on taking public lands, or facilities, and returning them to private uses through transactions such as land sales or long-term leases.
The Reston Station joint-venture/P3 project is a mixed-use development located on County property. This P3 project, which began in 2009, has the following measures associated with creating value.
- Total revenue generated (through lease payments)
Total lease revenue collected FY12 – FY17 – $4,463,230
Minimum lease payment from 2020-2035 = $2,900,000/annually
- Changes in aggregate property assessed value
2009 Total Assessed Value – $ 11,850,020 (tax exempt)
2017 Total Assessed Value – $237,325,610 (taxable)
In 2017, the County collected $ 1.9M in lease revenue and $3.3M in real estate taxes leading to a total of over $5M in revenue to the county related to this project in 2017.
- Private partner received control over 9 acres of County property at Metrorail site via 99-year ground lease.
Subsequently approved for up to a 979,096 square foot mixed-use development.
2. Improve Service Delivery: This principle is focused on new or improved services and amenities that the P3 project can provide to the community. Some projects may focus on delivering new public facilities or services, such as schools, libraries, or parking structures. Some may provide for integrated service delivery in an efficient and customer oriented manner. Others allow for expansion or increased capacity for existing infrastructure, such as roads and public facilities.
Merrifield Center is an example of a project focused on satisfying a critical health and human services community need. This project resulted in the following outcomes that were used as evaluation elements:
- Land exchange with adjacent property owner to allow for efficient development of a 200,000 sq.ft. community health facility.
- Co-location of Community Services Board services and local health-care provider to better serve individuals with complex needs.
- Improved operational efficiencies, when combined with lease savings due to relocation of services, provide a lower cost of operation.
3. Build Community (within the context of our comprehensive plan, area land use plans, capital improvement plan, Economic Success Strategic Plan, One Fairfax Resolution, and other strategic policy documents): This principle is focused on projects that achieve or facilitate desired community benefits. These may be projects that create places and communities that achieve the County’s vision for areas. We’ve found that while these are often qualitative or ‘squishy’ measures, they can be among the most important for community stakeholders.
We evaluate, and consider measurements for these three outcomes on every potential P3 project. Not all projects will have all elements, but our review forces us to deliberately evaluate each project and determine what the reasons are for Fairfax to enter into a partnership.
It also allows staff and elected officials to communicate using consistent language to describe and characterize multiple projects, even when the actual measures may change from project to project. This is critical, and directly supports the work by Dr. Eckerd, which illustrates that the most important element of project measurement is less about the specific measures used, than the process used to derive and describe them.
Using similar language for each joint-venture/P3 project allows us to create a consistent message with stakeholder groups, elected officials, and potential business partners. Just as every project is different, the outcomes and measures may also be different. Establishing a core process that allows specific measures and outcomes to vary from project to project permits us to leverage the attributes and assets of each individual project. It provides a method to use both quantitative and qualitative reasons for evaluation.
Liberty at Laurel Hill is an example project implementing the County’s strategic vision, goals and priorities through P3 projects. Fairfax county solicited a private developer to transform an 80-acre former prison site into a vibrant neighborhood. The project adaptively reused the historic structures into apartment space, created new townhomes and single-family homes, and community amenity areas. The following desired outcomes were used to measure success:
- Creation of new residential community with amenities,
- Preservation of National Register structures,
- Integration of area into surrounding community,
- Elimination of County cost for security and maintenance for 80-acre parcel, and
- Increased community access through the site to offsite park and trail amenities.
In our experience, each project may contain elements from each of the areas. In order to view the full context of projects we are able to use the three principles to create a ternary diagram and plot each project on the diagram.
Each axis illustrates the proportion of each project in each of the three principles. In this example we’ve ranked the previous three project examples in the following way:
- Reston Station (Create Value: 33%, Build Community: 33%, Improved Service Delivery: 33%)
- Merrifield Center (Create Value: 10%, Build Community: 10%, Improved Service Delivery: 80%)
- Liberty @ Laurel Hill (Create Value: 20%, Build Community: 75%, Improved Service Delivery: 5%)
The three principles, depicted on the chart, allow for clarity of desired outcomes and reasons for undertaking projects. They also allow for staff to communicate effectively about a suite of projects that may have very different reasons for being, despite all being joint-venture/P3 projects.
Leadership is required to drive implementation of the County’s strategic vision, goals, and priorities. The process of creating measures, and then using those measures through project implementation for P3s and joint ventures as in the above examples, empowers leaders to undertake these dynamic community-building opportunities.
Rob Stalzer is the Fairfax County Deputy County Executive for Planning and Development. He is a member of the College of Fellows of the American Institute of Certified Planners and a Professor of Practice in the Virginia Tech School of Public and International Affairs.
Scott Sizer is the P3/Joint-Ventures Policy Coordinator for Fairfax County. In this position, he helps to facilitate public-private projects across the six County agencies that have primary responsibility for project development and implementation.