Cities are poised to reinvent public-private collaborations, but they need help

The combination of rapid urbanization, increasing uncertainty and geopolitical tensions has put enormous pressure on cities to grapple with increasingly complex challenges: from climate change and pandemic recovery to global conflict and inequality.

Many local governments on their own do not have the capacity or resources to deliver the urban transformations necessary to keep communities safe and thriving. In this context, local governments are operating in an incredibly complex landscape and there is an increasing opportunity to lean on more support from across the private and non-profit sectors to drive digital transformation, action on sustainability, address under-funded programs to help service local communities.

Despite the growing pressure for cities to modernize, the traditional approach to public-private partnerships has, in some cases, become controversial. Yet, while controversies garner media attention, what too often goes unnoticed are the many instances of successful and innovative public-private collaborations which contribute to improving our communities.

Indeed, the key to a successful public-private partnership is undoubtedly collaboration. As our landscape review of public-private collaborations in cities has determined, true collaboration requires multiple stakeholders bringing different expertise, resources and points of view to the project. In addition to business and partnering government agencies, nonprofits and philanthropy can play important roles, as well as independent experts and community advocates. Aligning those viewpoints around shared goals, a structured strategy and mutual transparency is critical to building trust and maximizing outcomes for residents.

But that is just the first step. The mission-oriented economist Mariana Mazzucato has advocated that truly innovative public-private collaborations should not just address market challenges but play a strong role in shaping the market. One small but impactful example of such an approach is Detroit’s revival of its housing market.

Years after the Great Recession, abandoned homes in Detroit were still dragging down housing prices across the city. Mortgages could not be secured to purchase and renovate salvageable homes on mostly intact blocks. To address this market challenge, a public-private collaboration called Rehabbed & Ready combines philanthropic seed money with private and public resources to renovate and sell homes at market value to bridge the gap between home values and repair expenses. Recent data show that in neighborhoods where Rehabbed & Ready is active, home prices have increased from 76-365 percent. The program is now looking to do the same for multi-family housing.

Rehabbed & Ready is already having a market-shaping impact in Detroit. At a time when most cities across the US are struggling with housing shortages, Detroit is one of only four metro areas in the US that had more homes listed in March, 2022 than the previous year (an increase of 38 percent). The only thing holding this approach back is a shortage of contractors; to address this, a $10 million public-private pilot program seeks to build capacity in Detroit focused on minority contractors.

This holistic approach is in line with Mazzucato’s prescription for mission-driven public-private collaborations, which she says need to “focus investment on societal grand challenges that are tangible, ambitious, cross-sectoral and participative.”

The World Economic Forum’s Centre for Urban Transformation was founded on this open, inclusive approach to public-private collaboration.

Over the last year, the Center has worked with Accenture to interview more than 20 representatives from cities in North America, South America, Australia, Europe, Africa, and Asia, small and large, regarding their experience with public-private collaborations. Additional perspectives were also captured in the workshop titled, “Rethinking Public-Private Collaborations”, a closed-door session during the inaugural Urban Transformation Summit which was hosted by the World Economic Forum in Detroit in December 2021.

This initial research reveals a complex landscape. On one hand, some cities see the main inhibitors of PPCs as a lack of trust in the private sector, lack of capacity and skills to adopt PPC models, and uncertainty of how to find the right partners with the expertise needed. On the other hand, many cities have ample experience working with the private sector but are now looking for ways to improve their collaboration process to achieve transformational change.

The solutions, therefore, are not just rethinking traditional PPPs—which typically have been structured as a binary public-private procurement process—but also building an ecosystem of shared values that enable the private sector to support transformative changes for public purpose, such as renewable energy production and storage, climate change preparedness, and equitable social infrastructure.

To this end, Accenture and the Forum’s Centre for Urban Transformation are embarking on a multi-year project to support cities that are seeking to implement mission-driven public-private collaborations. The starting point was to identify the most urgent challenges facing PPCs; the landscape review was conducted with this goal in mind. As the next step, the joint team is now building a library of leading examples of public-private collaborations that, with the help of industry experts, will be turned into replicable models designed to help cities and PPC participants address common challenges. The leading examples will be analyzed carefully to reveal key decisions, tactics, strategies, and operating models that undergird effective PPCs, while summarizing the best practices and key lessons learned.

Cities and the private sector—businesses, financial organizations, nonprofits, academic institutions, and others— are invited to join the team in this important effort. Please submit your PPC ideas and examples to the Centre for Urban Transformation.