Protecting the Public in Public-Private Partnerships: Strategies for Ensuring Adaptability in Concession Contracts

Abstract

The recent bankruptcy of Detroit brought to the fore a widespread problem in American municipalities: state and local government face ever-growing costs in order to provide adequate services, facilities, and infrastructure for their citizens, but traditional means of financing the provision and maintenance of public services is no longer adequate to cover city expenses. Concession contracts — a type of public-private partnership whereby governments lease infrastructure assets to private entities, generally in return for large, up-front payments — have been proposed as a potential, innovative solution.

The few concession contracts that have been implemented, however, have generated considerable controversy. The biggest concern is that these long contracts are sacrificing long-term public interest for short-term economic gain. This Note seeks to evaluate the legal strategies available to governments to ensure that governments who enter into concession contracts are able to adapt to changing circumstances throughout the course of the lease. This Note proposes several strategies that governments can implement through structural, regulatory, and contractual channels in order to maximize long-term adaptability and ensure that public interest is never subordinated to private economic gain.