Public-private partnerships can create profitable projects that benefit all sides, but they can also become costly nightmares.
Manhattan Institute Senior Fellow Aaron Renn profiled Chicago's 2008 parking meter deal and the 2006 Indiana Toll Road project in his new study on what makes a public-private partnership, or P3, succeed or fail.
He said one of the problems with Chicago's 75-year privatization of its 36,000 parking meters in exchange for $1.16 billion was that the City Council that was given just three days to review the large contract.
"If people had actually read that contract, they may have come to some very different conclusions about whether the parking meter lease should have been done," he said.
Former Indiana Gov. Mitch Daniels' 75-year proposal to privatize a 156-mile tollway for $3.38 billion faced months of partisan debate and scrutiny. Renn said rigorous vetting ensured there was nothing in the bill that could have worked to the state's detriment. For instance, the state placed a non-compete clause in the contract that barred the state from building any nearby highways that would siphon traffic from the tollway, but didn't keep it from improving other roads.
The deal that Indiana made with the private group also shielded the state from financial hardships. In 2014, the Indiana Toll Road Concession Co. filed for bankruptcy that lasted until 2015, but the highway never experienced any disruption during the restructuring.
Renn said when projects like these are announced, citizens need to watch out for lack of accountability by the private entity and non-compete agreements that would hinder the state.
"You don't want a non-compete agreement that hobbles your ability to, for example, invest or upgrade or extend the Orange Line," he said.
Illinois is in the early stages of privatizing a new toll-road project on a 23-mile stretch of Interstate 55 near Chicago. The project would expand the lanes and improve road conditions in return for some form of privately-funded toll.