Public/Private Finance and
Development: Methodology, Deal Structuring and Developer
By John Stainback
New York: John Wiley & Sons, Inc., 2000, 287 pages
A quarter-century ago, "privatization" was not in any dictionary.
The term became prevalent sometime in the late 1970s and Prime Minister Margaret
Thatcher of Great Britain became the first national leader to make it a
centerpiece of economic policy. It has been in the dictionaries ever since.
Here in the United States, it wasn't until the 1980s-when governments at all
levels were straining under the weight of huge, expensive bureaucracies the
taxpaying public increasingly resented-that privatization began to really take
off. Here it has become particularly popular at the level of local government.
But it has to be done right. There's nothing worse for a "reform"
idea than a poor implementation that leads observers to reject the idea
outright. It isn't enough to simply declare, "Government is too big and its
services are antiquated and costly. Just turn them over to the private
sector." Any township, city, county or state official knows that rushing
into privatization without doing one's homework first is a prescription for
Fortunately, experts like John Stainback are telling us how to avoid the
pitfalls and ensure success. In his latest work, Public/Private Finance and
Development, he provides the reader with all the information he or she needs to
forge profitable public/private partnerships. This is not a book for the
generalist; it's not a quick and easy read. It deals with what has become a
complex subject, but it walks the reader through the minefields and provides
invaluable advice. Stainback describes both the advantages and disadvantages of
public/private partnerships. If you're a government official who would like to
explore partnerships with the private sector but aren't sure how to go about it,
this book is for you. If you're a developer, architect, contractor, investment
banker, attorney, or an engineer, and if you're interested in partnering with
the public sector, this book is for you as well.
Stainback is a nationally known authority on privatization strategies and is
often called upon to provide expert assistance in shepherding public/private
partnerships to successful implementation. He recently formed a new company,
Stainback Public/Private Real Estate LLC, based in Malvern, Pa.
Which projects are best suited for a public/private partnership approach? In
this age of high-tech and niche expertise, there are few projects the public
sector can bring to fruition entirely on its own. Stainback's shows how to
implement privatization plans for new building construction, rehabilitation and
expansion of existing buildings, infrastructure improvements, and to a lesser
extent for the management of airports, wastewater treatment plants, correctional
facilities, and other services.
Even more important, Stainback goes to great pains to emphasize the
importance of what would seem to the layman like minor details. For example, he
devotes an entire chapter to the process of soliciting developers. He explains
the formula for putting together a proper RFP (Request for Proposal), the notice
a governmental body issues to inform private developers of a new enterprise and
what will be required. This document, which sets the stage for success or
failure of the entire venture, must be not only informative, but must also
attract the developer. "Avoid introducing highly technical matters,"
Stainback advises. "If government and university officials are constrained
by an abnormal amount of regulations, specifications, and/or legislative
requirements, they should make the developer aware of these additional hurdles
by summarizing these issues, but they should not incorporate attachment after
attachment at the RFP stage. These details can be fully addressed after a
developer is selected. If the RFP is one or two inches thick, most developers
will not want to incur the time and expense of adequately addressing these
issues until he or she has been selected."
By the time the reader is finished with Public/Private Finance and
Development, he or she will have no excuses for not knowing how to structure a
win-win privatization deal for both the government and the firms with which it
Another useful portion of the book deals with the structuring of finance
plans. Using the "Stainback Five-Part Public/Private Finance and
Development Approach" illustrated in Chapter 7, projects that initially
appear to be financial losers can be transformed into attractive opportunities
that will attract capital.
But all this might still seem like so much theory if it were not for Chapter
10, "Eight Case Studies." This is where the rubber meets the road. In
very illuminating detail, Stainback explains how actual public/private projects
around the country came together. They include the Oregon Arena in Portland; the
Oyster School/Henry Adams House in Washington, D.C.; the Veterans Administration
Medical Center Complex in Durham, N.C.; and the White Flint Metro Station in
Bethesda, Md. From conceptualization to implementation, these case studies
provide detailed information that can improve the chances of success for any
With the tremendous volume of local and state privatizations here in Michigan
in recent years, it would have been a nice touch for MPR readers if
Stainback had at least one Michigan case study. Though none are here, the
lessons to be learned from other places are certainly as applicable to future
efforts in Michigan as well as anywhere else.
Stainback draws upon 24 years of experience in the real-estate industry,
including 15 years in public/private finance and development, to write this
book. With more and more helpful guides like this at our disposal, there is no
excuse for poorly planned or poorly executed public/private projects any more.
Lawrence Reed is president of the Mackinac Center for Public Policy.