VT Books and Law Review Articles

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“Over the past ninety years, cities and states have increasingly shifted control and oversight over government services from elected officials to quasi-private entities, called “public authorities”. Today, public authorities perform thousands of services previously provided by state and local governments, such as mass transit, economic development and housing. In executing these services, public authorities borrow more money than all of the cities and states combined, and in some states, such as New York, they issue over 90% of the public debt.

While public authorities are authorized to perform public services, they are specifically organized around a private sector model. The most common justification for structuring public authorities around the private sector model is that the model inherently achieves an increase in efficiency and independence in the provision of government services. Despite their rapid growth and increased issuance of debt, public authorities have received little critical analysis. Further, there is no existing standard to establish whether public authorities are meeting “efficiency, expertise and independence.”

This article sets forth one such standard based on private sector norms. It evaluates public authorities based on: (1) corporate responsibility measures; (2) market forces; and (3) internal monitoring systems. Based on the analysis, the article proposes a restructuring of public services to form regional governments or municipal cooperation, rooted in collaboration and efficiencies lost in the provision of public services through public authorities.

Public/private partnerships have become a favored strategy for implementing complex urban developments in the United States and Western Europe, but the large volume of literature on the topic falls short of providing city planners, development experts, and policy analysts the knowledge needed for either teaching or practice. In the late 1970s, the blurring of lines between public and private action spurred significant intellectual debate in the U.S. literature, and concern that those financing and carrying out public/ private projects had too much influence compared to those who would ultimately pay for or be affected by the projects. As a consequence, the early literature on public/private development projects in the United States did little to enlighten. This has been changing, however, and academic literature from abroad has used inventive means to analyze public/private developments and generalize about their impacts and significance. I synthesize the case-based research on public/private development projects to extract insights and lessons for planning, deal making, and performance, concluding by recommending the additional research that I consider most needed.

Abstract:

This article investigates the causes of differences among the states in the use of independent public authorities. Contrary to the findings in previous work, I find that the evidence does not support the view that authorities are “borrowing machines,” created to provide better access to capital markets. Rather, the factors associated with use of authorities seem distinct from those associated with general obligation borrowing, which suggests that purely fiscal motivations are not primary determinants of the use of authorities.