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Local governments in difficulty can get help from the private sector

For state and local governments, the pandemic has caused financial gloom: tax collections are falling, public health spending is increasing, and their infrastructure backlog is growing. Hopes for quick congressional relief were dashed late last year when the Senate refused to accept a House plan to bolster state treasuries.

For developers and real estate investors, all of this represents an opportunity.

Fiscal challenges could prompt the private sector to work with state and local governments, said Gabriel Silverstein, managing director of SVN Angelic, a real estate investment and advisory firm in Austin, Texas.

“We are in one of those times when the need is real,” said Mr. Silverstein, who has worked on public-private partnerships, known as PPP. He predicted that there could be “some interesting and creative things happening in the public-private partnership space.

Partnerships rely on developers and investors to take the initial financial risk, often delaying payments from governments until revenues start to flow or certain construction criteria are met.

“It can be an incredible use of private markets to contribute to the development, planning and smart growth that cities and towns need but are unable to do on their own,” said Lauren Jezienicki, Founder and CEO of One Circle Company, a residential real estate company, who worked on partnerships when she was Senior Vice President at Bozzuto, a real estate developer.

Partnerships have been used, sometimes with mixed results, for projects in parts of Asia, Australia, Great Britain, Canada and other parts of Europe. But state and local governments in the United States have been slower to adopt them. As their budget difficulties worsen, some officials are seeing them more closely as a tool to revive their economy.

President-elect Joseph R. Biden Jr. has proposed a $ 1.9 trillion rescue package to fight the economic recession, including $ 350 billion to help state and local governments close budget deficits. It is not yet clear whether Congress will agree.

But the data suggests that local governments will need all the help they can get. The National League of Cities estimates that nearly 90% of cities will be less able to meet their needs in FY2021 than they did in FY2020. Many states and local governments started FY2021 in July. 2020. The American Society of Civil Engineers has estimated that the United States should spend $ 4.59 trillion by 2025 to repair or rebuild roads, bridges, dams, airports, schools, and other infrastructure – and that was before the pandemic.

“We are witnessing this historic drop in revenues that public agencies have to contend with, which certainly results in the delay, suspension and cancellation of many projects, but the need for investment in infrastructure is more acute than ever” . said David J. Odeh, structural engineer and director at Odeh Engineers in Rhode Island.

Local governments have recently expressed new interest in public-private partnerships for projects such as building schools, said Darin Early, general manager of public-private partnerships at the Gilbane Development Company.

“Most of the conversations were around Kindergarten to Grade 12,” said Early, who heads a group of companies working on a public-private project for six colleges in Prince George County, Maryland. .

Partnerships have a mixed record. A toll road in Indiana collapsed after the private tenant’s bankruptcy in 2014. A widely criticized deal in Chicago to privatize the city’s parking meters was a major boon to investors, but is seen as a failure for the city . In Maryland, the Purple Line LRT is behind schedule, and the state recently agreed to pay $ 250 million to settle a lawsuit with the private alliance that is building the system over delays and cost overruns.

But they could be a way to bring back main streets and reinvigorate city centers, experts say.

An early partnership in Quincy, Mass. To invigorate the downtown core failed several years ago, but city officials have since worked with several private developers to support business and commercial development and build new housing. An agreement to rebuild Quincy T station and spur housing, office and retail development involves the town of Quincy, the Massachusetts Bay Transit Authority, Atlantic Development and Bozzuto. Another project with the same partners is under construction around the North Quincy T station.

Part of the discussion becomes who contributes what to what, said Chris Walker, chief of staff to Quincy mayor Thomas P. Koch.

Whether public-private partnerships are the right choice for state and local governments is an open question. Their main selling points are usually that the private developer pays for improvements and construction up front, often manages the entire project, and promises faster completion than if the government managed the project alone. But because interest rates are low and likely to stay that way for a while, state and local governments could also float bonds to raise money for infrastructure projects.

Bonds may offer an alternative source of funding, but private sector companies offer “expertise in mixed-use projects, our tolerance for development risk and our access to capital,” said Mike Henehan, chairman of the unit. development of Bozzuto.

Despite his early problems, Quincy does not hesitate to use partnerships, Mr Walker said.

“There is no initial risk to the city,” he said. “We don’t pay them back until the tax revenue comes in.”

Another plus: Partnerships can produce results quickly enough and expertly enough to generate long-term savings in public funds, said Sean Brooks, director of real estate and property development for Bay Area Rapid Transit.

“One of the most important things for us is to fund affordable housing,” he said. “We need to shake the trees and mobilize all amounts of funding for affordable housing.”

BART used these deals to attract development around its stations by offering density bonuses and pushing the developer to include affordable housing, he said.

But private investors need to do more than just view these deals as a chance for a quick profit, said Stephen K. Benjamin, Mayor of Columbia, SC.

“This not only requires that city and local authorities have an open mind, but it is really going to force institutional investors to rethink how they bring these ideas,” he said. “It’s about solving community problems rather than ‘We see this collective financial opportunity.'”

Even before the pandemic, the public school system in Prince George County, Maryland, was considering partnerships and this month expected to finalize a $ 1.24 billion deal to build six colleges.

The Washington suburbs have lagged behind its better-off neighbors for years in terms of academic performance, attracting businesses and jobs, and expanding its tax base. The public school system has been grappling with the stress of age and many of its more than 200 buildings have not been renovated in years. By looking for outside investors, county officials say, they get a good deal.

“This plan is one of the smartest we can do with the resources we have,” said county leader Angela Alsobrooks. When the private developer returns the buildings to the school system in 30 years, county officials say, they will be in better condition than if the school system had maintained them.

Some elected officials remain skeptical. The Prince George County project was rejected by a handful of county and school board members.

And in Stamford, Connecticut, officials last year rejected a public-private proposal to restore and rebuild schools that had mold and other problems. Some officials feared the costs would end up being higher than expected, leaving the city struggling in the future.

Details on the success rate of these partnerships are limited. Canadian government auditors’ reports have repeatedly questioned government claims that the projects are cheaper and save public funds.

In the long run, partnerships are not worth the risk, said Kevin DeGood, director of infrastructure policy at the Center for American Progress, a Washington think tank. A need to make public buildings more energy efficient, for example, could arise well within the duration of a P3 contract, requiring renegotiation. “It can be extremely costly,” he said, adding that cost overruns are also often the subject of dispute over the life of a contract.

“States are facing massive budget deficits,” he said. “PPPs don’t change that.”

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Private schools have benefited from PPP funding

This is the Coronavirus Schools Briefing, a guide to seismic changes in education in the United States that are occurring during the pandemic. Sign up here to receive this newsletter to your inbox.

This spring, when the federal government disbursed billions of dollars in emergency pandemic funding, traditional K-12 public schools in Los Angeles received an average of about $ 716,000.

Meanwhile, Sierra Canyon School, a private school in the San Fernando Valley where LeBron James’ son is an outstanding basketball player, received $ 3.14 million – part of a loan – pandemic grant to its foundation of the Federal Paycheck Protection Program.

New York public schools have an average of $ 386,000 in federal aid. But Poly Prep Country Day School, a private Brooklyn school with more than $ 114 million in the bank, got a $ 5.83 million PPP loan. Public schools in Washington, DC, received an average of $ 189,000 in federal funding. But a $ 5.22 million PPP loan went to Sidwell Friends School, Sasha and Malia Obama’s alma mater in Washington.

This week, as the federal government releases a second round of P3 loans, watch groups are tracking the money. Since its inception, the $ 659 billion program, to help struggling family businesses and nonprofits cover their wages with loans guaranteed by the Small Business Administration, has been marred by complaints that rich and connected had ousted the intended recipients.

A recipient database – released in full by the Treasury Department in December after the Times and other major news agencies filed a federal complaint – supported those concerns.

In education, the disparities were particularly striking. Public schools are not eligible for PPP loans because they have a separate aid pot under the federal CARES law. But private and charter schools could apply for the loans. Many did, sometimes to their embarrassment when the demands became public.

The Latin School of Chicago, which revealed an endowment of $ 58.5 million in a recent tax return, applied for a loan and then returned the money after an article in the school’s student newspaper, The Forum. The same was true for the elite Brentwood School in Los Angeles, after the Los Angeles Times noted that his students include two of the children of Treasury Secretary Steven Mnuchin.

Yet many elite private schools kept the money they asked for, citing economic uncertainty and rules that limited their ability to tap into their endowments to cover their salaries. After an initial round of PPP funding quickly ran out, the Small Business Administration released revised guidelines for the program that state that employers with other funding options should not apply. The rules have since been tightened even further.

But Accountable.US – a non-partisan watchdog organization that compiled the aforementioned statistics on schools in Los Angeles, New York and Washington – says it still needs to fill in the gaps that hide fairness issues, making the program vulnerable. to potential fraudsters and continue to leave well connected cash in loans. And minority-focused lenders raise similar concerns. This fight is far from over.

After the epidemics of last fall, the city-state of Singapore has on average less than one locally transmitted case each day. Since the start of the pandemic, reports our colleague Sui-Lee Wee, its three major universities have not reported any cases of community transmission.

From our perch here in the United States, it almost sounds like a fantasy. But the three factors that contribute to its success – technology, restrictions, and compliance – can provide a useful benchmark for educators and government officials around the world.

The National University of Singapore has invested in vast testing resources and is screening dormitory sewage for traces of the coronavirus. It’s in sync with many American campuses.

But the university is also using technology to enforce social distancing measures, especially by evacuating crowds in high traffic areas. The university president regularly scans an online dashboard to see how crowded the cafeterias are. If the real-time map shows that a dining room is too full, it asks admins to send a notice to avoid it and use other options.

Singapore’s government has adopted an aggressive response to the pandemic: it punishes those who violate restrictions, in some cases by deporting foreign nationals and revoking work cards.

In universities, severe restrictions on campus have led to the expulsion of some students from dormitories to accommodate visitors. More than 800 students signed a petition last October to lift the restrictions.

“The consequences are serious, so people are afraid” said 24-year-old law student Fok Theng Fong.

Most students in Singapore do not live on campus. And Singapore has no fraternities and sororities.

Olyvia Lim, a senior at Nanyang Technological University, said reports of American students partying amid a pandemic have confused her friends.

“We all said, ‘Why would they risk doing such a thing? Said Lim. “It’s a little hard to believe because we’re the same age, but I think that’s the culture. It’s all about freedom, but when the government says here, “Wear a mask”, we all do it. “

  • After the University of Alabama won the college football championship on Monday night, thousands of people partied in the streets to celebrate, in a potential super-spreader event.

  • Appalachian State University and the University of North Carolina-Charlotte joined a growing list of schools delaying the start of in-person learning. And a community college in California, Chaffey College, canceled in-person classes for the spring term.

  • Many colleges in Rhode Island plans to open soon, despite the rise in cases.

  • Art in the midst of chaos: Three students at Dartmouth College shared their artistic creations with Emma Ginsberg, reporter for the student newspaper. Jazz, pastry and theater are still flourishing.

  • A good read: Our colleague Billy Witz looked at the often absurd inequalities in college sports. “It’s hard to disentangle the hypocrisy from the heartwarming in the college sports mega-business, where the coronavirus pandemic has exacerbated the conflicts inherent in a financial model that is raking in billions off the backs of unpaid gamers.

  • About 250 public schools in New York City offer full-time classes, five days a week to all of their students, according to Mayor Bill de Blasio.

  • After delays, Utah began vaccinating teachers on Tuesday.

  • Arkansas expand its vaccine distribution to teachers, child care and higher education workers.

  • Boston plans to bring more students back from public schools for in-person learning starting in February. Last week, Governor Charlie Baker unveiled plans to begin pool testing for Massachusetts students and staff.

  • A notice from Chicago: Stacy Moore, Executive Director of Educators for Excellence-Chicago, did not mince words. “If the leaders of our school district and teachers’ union continue on this path, no one wins,” wrote Moore, a former teacher. “It’s time for both sides to act like adults and come to the table to compromise.”

  • A worthy watch: A teacher at a Baltimore public school posted a powerful video with student testimonials. “It’s so hard to stay connected with your computer,” said one student. “It’s like a curse.” Alec MacGillis, journalist at ProPublica, written on twitter that it was “the first collection of first-hand student accounts that I have seen from anywhere in the country”.

Our colleague Christina Caron has written a handy explainer for everything you need to know about Covid testing for children. She spoke to five doctors and two of the largest emergency care providers in the United States to analyze the following questions: Are there less invasive tests? If so, where? Are they correct? And how should parents prepare a disgusted young child for the sample?

There is a ton of information in the article. But in general, to calm the nerves, Christina recommends going to a pediatrician. “Doctors and nurses who test children regularly will likely know what to do if your child is nervous or scared,” she wrote.

Sign up here to receive the briefing by email.

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“ Such a personal and private thing: ‘Rethinking the home pregnancy test

When Tiffany Jesteadt, who was born blind from an inherited disorder, thought she might be pregnant, her sighted husband read the results to her, not out of choice but out of necessity. It took some of the “magic,” she said, explaining how shows and movies often portray wives surprising their husbands by cleverly hiding the positive pregnancy test.

“Getting to tell your husband – it’s cultural,” said Ms. Jesteadt, 33, an organizational development practitioner for the United States Marine Corps. While she and her husband tell each other everything, she says, divulging information about her own body “is something a woman should be able to control.”

Making the experience of the test more private also helps reduce the judgment that many blind women say they experience on their way to motherhood.

Josselyn Sosa was a college graduate when she found out she was pregnant. At first, Ms Sosa turned to a trusted friend who went with her to buy a test at a CVS store which she then took in her bathroom. Her friend also had poor vision and could not read the results either. So Ms. Sosa went to the health center at her small college in Texas, where a doctor said to her, “I’m so sorry, but it came back positive.”

“She felt she could give her opinion,” said Ms Sosa, 28, who was born with congenital glaucoma in her right eye and lost sight in her left eye due to a detachment of the eye. retina when she was 12 years old. She was dating her now. husband, who is also blind, for a short time. “I just wanted to go out and face it on my own,” she said. “It was so important to me.”

Ms. Sosa then gave birth to a baby girl, now 4 years old. She graduated in hospitality this month and is pregnant with her second child, due in June.

For her current pregnancy, Ms. Sosa used the Be My Eyes app. It was a better experience, but she still felt like she was giving up her privacy, she said.