Public universities are showing an increased interest in public-private partnerships to provide infrastructure and services at their schools.
Three-quarters of higher education respondents in a new survey said they’re interested in increasing the number of P3s on their campuses. That is higher than last year’s number of 71%.
The survey, which included 385 college and university leaders, is the most recent from The Chronicle of Higher Education and P3 EDU, which released the survey ahead of its annual event for university leaders to share best practices around P3s. The invitation-only conference will be hosted by the University of Colorado, Denver from Sept. 27-29.
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Another 23% of respondents said the level of P3s at their schools will remain the same and less than 2% said the option is decreasing.
Higher education has in recent years become one of most active P3 sectors, with energy, parking and housing proving to be popular projects on the infrastructure front. The partnerships come as many colleges and universities face rising financial pressures and projected enrollment declines.
The latest survey shows that workforce development and employee training is the most popular area for private partnerships, with 70% of leaders saying they’re interested. Health services followed, with 48% of leaders interested. Just under 25% of university leaders reported an appetite for P3s on energy/sustainability solutions and 20% named student housing as an area of interest. “Other real estate development” drew interest from 18% of respondents.
Just under 75% of leaders said their top reason for partnering was the private sector’s “unique competencies/superior service to in-house alternatives.” Half said their top reason was speed of execution and speed to market, and 32% said availability of investment capital.
Not all P3 deals have gone well. The University of Iowa’s 50-year lease of its energy system this year sparked litigation over the university’s alleged breach of contract. Eastern Michigan University’s troubled parking system concession hit a new low in May with the first payment default on bonds tied to the transaction.
In a May 2 sector comment that discusses risks and benefits for universities when they enter into demand risk, hybrid and/or availability payment P3s, Moody’s Investors Service noted that the University of Louisville canceled a proposed utility system monetization following the Iowa litigation.
“Even well-structured agreements that incorporate various contingencies for future unknown events can go awry, leaving universities exposed to legal, reputational, financial and operational risks,” Moody’s said. “Successful partnerships require both parties to be flexible and work closely together to respond to shifts in conditions that may be unforeseeable when the agreement was initially drafted.”