City of Raleigh’s Partnership Policy

Types of Partnerships Covered by the Policy

The Urban Land Institute identifies three major types of Public-Private Partnership (Partnership) arrangements, all of which are covered by this policy:

Type 1 - Partnerships to Facilitate Development of an Area

Partnerships to develop a specific real estate asset or community area. In such cases, the City contributes land, financing, funds, or other consideration to fill a financial gap in a project to produce a public benefit such as affordable housing, economic development, or historic preservation.

Type 2 - Partnerships to Develop Critical Infrastructure

Partnerships to develop public infrastructure. When private development is occurring in an area planned for complementary public investment, and where there are economies of scale or coordination efficiencies that can be leveraged, a partnership arrangement with a private developer can deliver critical public infrastructure faster, at lower cost, or with lower City staff overhead than traditional procurement.

Type 3 - Partnerships to Monetize Public Assets for Public Benefit

Partnerships to unlock value (monetary or otherwise) from a public asset and use the proceeds for public benefit. The City owns land and buildings from which it is receiving little benefit, that could be converted into money or public benefits with the right private partner.

Legal Authority

The City can enter into partnerships only where there is authority in the North Carolina General Statutes or the City Charter to do so. The primary sources of legal authority include the following:

NCGS 160D Article 10 – Development Agreements
NCGS 160A-499 – Reimbursement Agreements
NCGS 160A-309 – Intersections and Roadway Improvements
NCGS 160D-1315 – Downtown Development Plans
NCGS 160A-278 – Ground Leases for Affordable Housing
NCGS 143-128 – Construction Contracts
Chapter 88 of the Raleigh City Charter – Private Sale of Real Property for Market Value

Article 8 of NCGS 143 provides authority for public-private partnership construction contracts. This authority would be used as an alternative contracting and delivery mechanism for major public projects. Such large capital projects would follow their own planning and budgeting process and are outside the scope of this policy.

Underlying the use of the above authority are the following broad statutory principles:

When contracting with a private partner to do public work, the work needs to be something the City has the authority to do itself.
Any monetary contribution from the City must come from a source of funds that is eligible for the intended use.

The public benefits should be commensurate with or greater than the public investment in the project.

Partnership Evaluation

The Partnership Policy is constructed under the assumption that partnerships should be used for projects that advance council priorities and provide public benefits that exceed costs. Partnership arrangements must offer advantages over traditional procurement methods and result in a fair allocation of cost, risk, and value between the City and the private partner.

If a partnership aligns with one of the three Partnership Types described above, the City will evaluate the opportunity further by considering the following three questions:

Eligibility: Is the Project Worthy?

Projects should score at least 20 points on these 12 criteria to be eligible. Projects already in the CIP or identified in an adopted plan are automatically eligible. Other projects need to support at least two of the remaining ten criteria. No project that is required for regulatory compliance is eligible unless the project provides clearly identifiable benefits above and beyond what an alternative approach to compliance would deliver.

The project fulfills a specific project recommendation or goal in an adopted Area Plan, 2030 Comprehensive Plan, Street Plan, or another approved plan. (20)
The project is already included in the adopted Capital Improvement Program. (20)
The project is in an area eligible for the Public Project Community Support Fund. (10)
The project supports the Wake Transit Plan by increasing access to transit or improving service quality or passenger amenity. (10)
The project provides a benefit to existing or proposed affordable housing. (10)
The project supports active transportation, such as biking and walking. (10)
The project improves or provides multimodal access to an existing or new public amenity such as a park, greenway, school, or library. (10)
The project helps the City meet its greenhouse gas reduction goals or furthers climate adaptation and resiliency, as identified in the Community Climate Action Plan (CCAP). (10)
The project addresses a documented safety concern. (10)
The project unlocks value from an underutilized City asset. (10)
The project mitigates a stormwater problem and/or improves water quality. (10)
The project advances equity by undoing a past harm, mitigating a disparate impact, or improving opportunity and empowerment for historically marginalized people. (10)

Appropriateness: Is a Partnership the Right Tool?

If a project is found worthy, the next decision is whether a Partnership is an appropriate implementation method.

First, the City must have the legal authority to enter into the arrangement. The authority available to the City will vary based on the type of Partnership arrangement, project location, and public purpose being implemented, as described in the section on level authority.

Second, a Partnership should be a superior way of providing the intended public benefit versus a purely public project. At least one of these five statements should be true:

Significant City resources (e.g., right-of-way, land, air rights) are available to leverage with private investment.
Delivery timelines would be expedited or have a timing advantage from cooperation.
The private partner is contributing funding and/or financing to the project that would not be available otherwise.
Partnership would provide opportunities for innovation in design, operation, or financing of public infrastructure.
Partnership would more effectively manage project risk.

Fairness: Is the Deal Fair?

Any Partnership agreement represents an exchange of value for value—otherwise, there would be no basis for a deal. For a deal to be fair, both parties should be better off because of their partnership, but no partner should obtain outsize benefits relative to the other or to their contribution.

For any partnership that involves the sale or lease of a City asset, the City is obligated to either obtain market value for the property or to receive legally recognized public benefits of equivalent value. Market value will typically be established by appraisal, and the value of public benefits will be estimated using a financial pro-forma (for affordable housing), construction cost estimating, or other established method.

Whether or not the disposition of real property is involved, fairness requires two other conditions be met:

The ratio of public and private costs is roughly proportionate to the ratio of public and private benefits.
Risks are equitably distributed, with the party assuming the risk receiving adequate compensation.

While these concepts are simple, their validation in the real world is less so. Ideally, these ratios would be based on rigorous quantitative analysis, but good estimates of the dollar value of both public and private benefits may be difficult or impossible to obtain. Instead, both parties must justify whether the project is high, medium, or low priority and negotiate accordingly. The appropriate breakdown of costs will vary based on the priorities of the parties, the value created by the project, the overall project costs, and the available alternatives to partnership. As every project will be unique, no standard methodology can be used to make a fairness determination. Instead, staff will document findings that the cost-benefit ratio and risk distribution are fair, on a deal-by-deal basis, and Council will evaluate and decide as part of the approval process.

Approval Process

The following process represents the minimum steps that will be used to advance potential public-private partnerships. Additional steps may be added at the behest of City Council or if required by statute.

Step 1: Initiation. The City is approached by a private partner, or vice versa, with a project idea. Staff intakes the idea and ensures that there is enough information to conduct a meaningful evaluation.

Step 2: Evaluation. Staff analyze the proposal against the eligibility and appropriateness criteria. If possible, a rough estimate of total project cost (irrespective of who pays) should be developed. Staff determine if the priority for the project is high, medium, or low. Multiple departments contribute to the evaluation. The results will be shared with the City Manager’s Office for review prior to moving to the next step.

Step 3: Initial terms. Based on the results of the evaluation step, staff negotiate draft terms with the private partner. These terms will cover the broad topics of cost and risk sharing, responsibilities, and desired outcomes. The purpose of this stage of the process is to provide enough of a framework for the agreement to present to City Council for feedback.

Step 4: Council presentation. Staff will present the draft terms to City Council at a regular meeting. (Alternatively, Council could choose to create a standing delegation of such items to a specific committee, such as GNR or ED&I.) Staff will obtain from Council guidance as to the acceptability of the terms and authorization to continue with subsequent steps. Depending on the nature of the proposal, Council may refer it to an appointed board (for example, Parks & Greenways Advisory Board or Stormwater Management Advisory Commission) for input before deciding whether to move forward.

Step 5: Detailed terms and legal agreement. Assuming authorization is obtained, staff will continue to negotiate a detailed term sheet, and then work with the City Attorney’s Office and legal counsel for the private partner to draft the required legal instrument(s).

Step 6: Council approval. Once the terms have been agreed upon by all parties, staff will bring the negotiated agreement back to City Council for approval.

Connect with the UPG Team

There are a variety of ways that the city can participate in partnerships across sectors to implement City goals – from simple transactions that unlock greater public value to more complex collaborations that improve project feasibility and catalyze development goals.

If you would like to share a project proposal or connect with the Urban Projects Group - Partnerships & Advocacy team, please reach out using the following email: urbanprojects@raleighnc.gov

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