C a s e S t u d y

Replication of Gabrovo's public-private partnership project

Summary

The overwhelming success of the Phase II projects that the municipality of Gabrovo and the City of Portage, Michigan, undertook in 1998 led to an extension of the public-private part ner ship project to other Bulgarian municipalities in Phase III. The replication began with the recruit ment of the communities of Sevlievo and Tryavna, which were interested in learning more about developing a public-private partnership project. These communities applied Gabrovo's best practice model in an effort to derive the significant economic benefits already experienced in Gabrovo. The replicating communities expect that the cooperative approach to the sale of municipally owned properties for develop ment purposes will increase municipal revenues (sale of property and collection of taxes), create new jobs for the economy, and promote additional investment opportunities for local businesses.

Problem Statement

Following on the success in Gabrovo, the municipalities of Sevlievo and Tryavna joined the project for Phase III and initiated use of the public-private partnership model in an effort to achieve similar results in those communities. The goal of the project is not only transfer of successful practice and solicitation of specialized knowledge, but also improvement of the social and economic environment in the two municipalities. The public-private partnership concept is a tool that helps the city authorities to promote economic development and enlarge the tax base.

Project Description

Begun in late 2000, the project called for the sale of municipal property for development pur poses through a public bidding process. Gabrovo's municipal staff assumed responsibility for coordinating the bidding process and advising on the tasks to be accomplished. Likewise, Portage staff members continued to serve as advisors for the process, assisting in resolving issues that may not have arisen during the Phase II projects.

In the course of project implementation, municipal staff from Gabrovo, Sevlievo, and Tryavna prepared detailed information and maps on the properties to be sold (initially a total of three), including the availability of utilities, road infrastructure, descriptions of existing buildings, zoning, parcel data (dimensions, soils, and buildable area), and permit information. The municipal staff established a process whereby they prepared bid packets and sent them to prospective private investors, conducted pre-bid meetings to explain the bid requests, and accepted proposals in a public forum so as to eliminate the possibility of favoritism or bias in the final selection process.

The municipal staff advised private investors bidding on the properties that the bids would be evaluated based on the price to be paid for the property, as well as commitments to develop the property, create job opportunities for the community, and identify other ways for business to support the community.

Initially, we identified three building sites in the replicating communities-two for Sevlievo and one for Tryavna. The two communities conducted several pre-bid meetings and bids, but the bids were unsuccessful. It turned out that in the case of Sevlievo, one of the sites was too big, with no infrastructure/communications available, and the other site was within the limits of a residential zone and due to its zoning could not attract investors. In the case of Tryavna, investors attended the pre-bid meetings but did not submit any bids. After the unsuc cessful effort to allow open bidding for the parcels, the communities developed a new, more flexible approach that turned out to be more successful.

During the pre-bid meetings in Sevlievo, the experts from the Department of Planning found out that local investors are interested in smaller sites, far from the town center, for industrial purposes. In this way, Sevlievo used the pre-bid meetings as a means of a marketing approach among the investors. As a result, the experts identified a new site that met inves tors' require ments and announced a pre-bid meeting. Twelve participants showed interest, and two weeks later Sevlievo sold four parcels of municipal land to local business owners.

In Tryavna, to negotiate the best deal possible for the citizens of their community, local officials re-bid the same parcel with completely new bid specifications that were more attractive to investors in terms of price. Finally, Tryavna concluded a deal with a local investor and sold the lot for the construction of a new hotel.

Implementation Timeline

n October 2000: Conducted a seminar to inform nearby communities, NGOs, and the media about the public-private partnership concept.

n January 2001: Identified three sites in the municipalities of Sevlievo and Tryavna and preparation of detailed bid specifications.

n April 2001: Published announcements in the local media for the conduct of the pre-bid meetings with the help of local NGOs-the Chamber of Commerce and Industry, the Industrial Economic Association-in order to use their contacts with the business sector.

n May 2001: Conducted the first pre-bid meetings in Sevlievo and Tryavna.

n June 2001: Announced the bids and sent tenders to potential investors in Sevlievo and Tryavna.

n July 2001: Conducted open bids with potential investors.

n November 2001: Developed a new, more flexible approach for further action on the public-private partnership project. Extended the dialogue with business representatives by using the pre-bid meetings as a marketing approach.

n January 2002: Identified a new plot in Sevlievo, re-bid the Tryavna site with completely new bid specifications, and announced pre-bid meetings in the two communities.

n March 2002: Conducted successful bids in Sevlievo and Tryavna.

n April 2002: Held a final meeting in Tryavna to disseminate the project results. Project participants from Gabrovo, Sevlievo, and Tryavna; coordinators from other Bulgarian towns working on the Technical Twinning Program; and representatives of the Foun da tion for Local Government Reform, local NGOs, and the media attended the meeting. The meeting participants had the chance to exchange their experiences and successful practices, and discuss the project's further dissemination.

Specific Results and Solution Overview

Expectations were high for the new partners in the program, considering the success experienced in Gabrovo during Phase II. In the replication communities of Sevlievo and Tryavna, Phase III had similar success with private investment, added revenue for the municipalities, and job creation for the citizens of the community.

Sevlievo outcomes:

Initial bidding price: $10,310

Selling price: $14,520

Four parcels of municipal land were sold for commercial and industrial purposes.

Investments in infrastructure development: 10,000 lev

Full-time jobs created: approximately 12

Tryavna outcomes:

Initial bidding price: $11,985

Selling price: $15,010

Functional destination: hotel

Investments in building: $50,000

During the construction period local workers will be employed

Full-time jobs created: 10

Conclusion

We have already established a sound base of methods, best practices, and experience that allow the public-private partnerships to continue. By following the simple and widely accepted principles of bidding and sale of public property for private investment, Bulgarian communities will be able to improve the local economy and enhance the quality of services delivered to the community. The most valuable result is that participation in the project helped Bulgarian municipalities realize that the public-private partnership concept can be successfully applied in many other areas.