Private money for public projects.

• Author: Landow, Paul

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In the non-profit environment, a new form of philanthropy has emerged in which the contributor's role extends beyond merely providing financial support, to direct involvement with the organization's operations. This donor activism has spread to governments, as state and local jurisdictions increasingly seek private funding to supplement public dollars, and concerns have arisen regarding potential attempts by wealthy individuals to dictate policy through their donations. For example, officials in a California city were criticized for accepting a land donation from a controversial scientist who required the resulting park to be named for him. Contributions like this raise the question: Does the flow of private dollars into public projects, however well intentioned, amount to undue influence over public policy?

In Omaha, Nebraska, significant private donations helped in the construction of two major city facilities, a convention center/arena and a new baseball stadium. In exchange, the donors insisted on creating a public authority to run the operations, and they required a majority of the original board to come from their ranks. In the context of democracy and representative government, economic development, and the drive for a leaner and more efficient public sector, these types of partnerships present opportunities and challenges. Examining the Omaha case can help public administrators evaluate the pros and cons of these arrangements.

OMAHA'S PUBLIC-PRIVATE PARTNERSHIP

Omaha is home to five Fortune 500 companies, as well as other major corporations. High-ranking corporate executives have long been involved in civic affairs, but their interest in local government was historically confined to providing passive advice and financial campaign support. Recently, however, a coalition of business leaders has taken a more aggressive role in high profile municipal projects.

In the 1990s, city and corporate leaders conceptualized a new convention center/arena, and a 1997 commission recommended a $275 million downtown facility. It also suggested the creation of an independent public authority, the Metropolitan Entertainment and Convention Authority, to operate the facility and to ensure efficient management and proper maintenance. A compromise reached in fall 1999 called for voter approval of city bonds, the creation of MECA, private funding for $75 million of the cost, and a guarantee of no sales tax increase.

An interim MECA was established, with three members named by the donors and one each appointed by the mayor and city council. The authority was meant to "lend professional business expertise and would remove politics and government bureaucracy." (1) At the time, business leaders said that they could not raise $75 million in private donations for the convention center/arena without establishing a business-dominated semi-independent authority.

Voters authorized the bonds and the creation of MECA in 2000, shortly after the private donors announced pledges for the full $75 million. Private funding came from approximately 30 companies, individuals, and foundations. The private money was raised by a non-profit organization established by corporate leaders to act as a conduit for their philanthropy.

The new convention facility, the Qwest Center, opened in fall 2003, with a final cost of $291 million. The city was responsible for $216 million in debt, which is paid from a variety of sources, (2) while MECA controls the facility's operation through a 99-year lease agreement.

The public-private partnership took on a second major project, a new baseball stadium to replace Omaha's Rosenblatt Stadium, the...