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Working with Private Partners. NSW Community Housing Conference 2006 Hal Bisset Ward Bisset Consulting. Understanding the private sector. Private companies are based on capital invested by individuals who are prepared to risk that capital in the hope of generating an income
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Working with Private Partners NSW Community Housing Conference 2006 Hal Bisset Ward Bisset Consulting
Understanding the private sector • Private companies are based on capital invested by individuals who are prepared to risk that capital in the hope of generating an income • Private companies generate employment for people who rely on the profitability of the company for their continued employment and income • Making a profit is a legitimate and essential first order objective of any private company • Private companies have many owners and employees who have a social conscience and welcome opportunities to achieve social justice through their workplace • Many private companies are very open to partnerships with not-for-profit organisations which will result in the achievement of mutual objectives
Self-employed Generate a reasonable wage Give something back to the community Get involved or do something for nothing Listed on the ASX Achieve a risk adjusted rate of return on capital to shareholders Demonstrate corporate social responsibility CSR policies and programs The diversity of the private sector
Potential private partners for Housing Associations • Trades and contractors – property management • Builders and suppliers – construction • Technical advisors – architects, planners, engineers, cost estimators • Professional advisors – lawyers, accountants, bankers • Joint ventures – developers, investors
Types of partnership • Commercial contract • Preferred supplier • Community Business Partnership • Joint venture • Public Private Partnership
Community Business Partnership • A concept gathering momentum with companies interested in Corporate Social Responsibility • See www.partnerships.gov.au/ • Mutual partnerships between corporations and NFP’s • Corporation might provide • Employee giving scheme • Volunteer involvement • Pro bono services • Research and development • Networks and linkages • Discounted goods • NFP might provide • Opportunities to promote corporation • Education within corporation • Opportunities for volunteering • Example: Melbourne Affordable Housing and Mallesons
Joint Venture • Two parties commit capital to a single venture • The parties share the risks and the rewards, not necessarily in equal proportion • For Housing Associations the most relevant opportunity is in a mixed private-affordable housing development • Joint Venture Agreement will define contributions, responsibilities, risks and rewards • Developer will generally manage development risks in a larger scale project • The risk/reward relationship will be carefully negotiated • Example: Jubilee Housing and VicUrban
Public Private Partnerships • A form of government procurement which generally involves the private sector building, financing and managing a new facility under a single Deed with payments spread over time • PPP’s involve the establishment of a special purpose finance vehicle with a very low risk profile to contract with government • The SPV will in turn contract with the necessary specialist service providers and in the process transfer the risks associated with that service to the provider • In a housing PPP a HA will be expected to undertake the required Tenancy Management Services • In Australia HA’s are unlikely to have the balance sheet necessary to assume all TM risk – which may require other parties to “guarantee” the HA with consequent implications for accountability • Example: Bonnyrigg Living Communities Project
NSW FHA Kits • Community-Business Partnership Kit • Large Scale Partnerships Toolkit