Public-Private Partnerships (‘PPP’) have become one of the most successful tools for foreign, domestic, federal and local governments to drive job creation and economic growth. President Obama has repeatedly spoken of the many advantages of PPPs and has earmarked $50 billion for projects in his new budget. In fact, he has said that, "America works best when it's calling upon the resources and ingenuity of our vibrant private sector." The President is correct in his assessment. Essentially a PPP is a joint venture between government and the private sector that creates jobs. Currently, more than 30 states have individually endorsed legislation encouraging PPPs.
Former President Clinton is an avid proponent of PPPs. He has pointed out that the concept is widely gaining international traction. Germany kept unemployment down after the financial crisis with incentives that encouraged employers not to lay people off. In fact, the country supplements the costs to employers in order to keep them on the job. Additionally, Singapore’s alliance between government and business has produced vigorous growth, especially in biotechnology.
PPPs come in all shapes and sizes. In 1992 a partnership between The Nature Conservancy, five regulatory government agencies, and The Walt Disney Company (NYSE: DIS), created The Disney Wilderness Preserve. It was the first large-scale venture committed to restoring and protecting wetlands and 40 threatened or endangered species in an intact ecosystem. The PPP originally set aside 8,350 acres for the project.. Five years later, Universal Studios, Florida joined bringing the total project size to 12,000 acres. The project is considered a classic model of innovative PPPs for wetland improvement.
Another active example of creating win-win situations with PPPs is Medient Studios’ (OTCQB: MDNT) PPP with the state of Georgia and the Effingham County Industrial Development Authority. In 2008 the state passed the Georgia Entertainment Industry Investment Act which grants qualified production companies a transferable income tax credit of 20% for film and television investments of $500,000 or more. An additional 10% is given for all companies that embed a Georgia Entertainment promotional logo with the credits. The industry is now responsible for 23,000 jobs and $1.3 billion in wages within the state.
MDNT, a Los Angeles based production and distribution company, inked a deal with the Effingham County Industrial Development Authority (‘ECIDA’) recently to build a massive studio complex outside of Savannah. Medient chose Georgia, and specifically Effingham County, after reviewing proposals from states such as Pennsylvania, Michigan and New York, who endeavored to bring Medient and its jobs to their states. The agreement with the ECIDA works strongly to the advantage of both parties. In addition to leasing 1,550 acres to the Medient with zero percent financing, and providing cash grants for site improvements, the Georgia Department of Community Affairs and Georgia Department of Economic Development also have committed a $3 million grant for the project. As a result, the studio campus will generate over 1,200 direct jobs, and thousands more indirectly, and thus will be a strong economic catalyst in the county.
Enterprise Florida Inc. (‘EFI’) is a PPP serving as Florida's key organization devoted to statewide fiscal development. EFI has forged strategic public-private partnerships with companies such as AT&T (NYSE: T), Sun Trust Banks, Inc. (NYSE: STI), Toronto-Dominion Bank (NYSE: TD), and Wells Fargo & Co (NYSE: WFC).
Perhaps Tesla Motors Inc (NASDAQ: TSLA) best illustrates the essential role of private-public partnerships in cultivating innovation and bringing new products to market. The company is engaged in developing a federally compliant electric vehicle. Since 2008, the cost of an advanced battery for the vehicle has fallen by more than 50 percent because of the Department of Energy's venture (in partnership with Tesla) in this technology. Additionally, programs championed by local and state governments have enhanced the number of charging stations to more than 17,000 across the United States. Because of this strategic public-private initiative, eco-friendly vehicles are becoming a viable option to reducing our carbon footprint.
The future of job creation in America is being fueled in strong part by forward-looking governments utilizing PPPs. For private companies such as Medient, Tesla and Disney, they stand to profit immensely while helping accomplishing a public good.
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