If the plan is successful, Prince George’s County, Maryland, could soon become the first school system in the nation to use a public-private partnership, or P3, to fund the building of several new schools.
On Friday, the school system said it has four interested developers who will begin competing against one another for a contract that could potentially bring in close to $1 billion over 30 years.
To help guide the process, the school system hired Jason Washington as its director of public-private partnerships. Washington is the former executive director of the National Council for Public-Private Partnerships.
In speaking to the county’s Board of Education, Washington said the bidding requirements on the P3 are set, and bids are due by Sept. 14.
The winning bidder would be responsible for building six new middle schools in the county by 2024. Once students and teachers can move in, the winning bidder will oversee the school’s maintenance for the duration of the partnership, while receiving payments that total around $30 million a year.
Washington believes that since the school system knows what it takes to build a school, it is in a good position to make this plan work.
“We have a sense of expertise in being able to see smoke and mirrors,” Washington said.
The school system feels a P3 plan would fast-track the building of the six schools. Waiting for the school system to fund and build schools on its own is estimated to take more than 10 years to complete.
“This gets us six news schools in a few years, which is absolutely incredible,” said board of education member Pamela Boozer-Strother.
In addition to the annual payments once the schools are up and running, the winning bidder will also see a progress payment of $15 million during the design period. They also will receive a $5 million payment for each school when ready to be occupied.
There are some risks that come with a P3, which includes the school system being required to ensure the developer sees the required return necessary to keep the project running.
School board member Raaheela Ahmed said she is concerned about the possible $1 billion price tag for the P3 project if it hits the $32 million annual cap Washington said the project has.
“This seems just escalating in stakes and costs for me,” Ahmed said.
Washington said several developers said they plan to come in below the $32-million mark with their bids. He also said there are provisions in place if a developer claims it miscalculated a proposal after it is selected.
“We have the right, and we will terminate the deal,” Washington said.
Others also raised concerns about whether a $1.5 million payment owed to the school system by the developer if the school is not completed on time is enough of a deterrent to make the winning bidder maintain the agreed-upon timeline.
Washington believes it would be since several developers called it unfair and punitive.
“We feel that when we get them squealing that we’ve hit a nice spot,” Washington said.
The new director of public-private partnerships also said that the selected developer is expected to build schools that can last 60 years. Once the P3 period ends — the expected to be around 30 years — the school system expects to have 30 years of life left one the building once it is turned over.
Once a bid is selected, the Prince George’s County Board of Education would then have to approve the deal in October.