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Guide To Generating Local Government Revenue Through Private Sector Partnerships

By Stephen Brandofino

Generating revenue for local governments is a tall task that many local officials find to be challenging in various ways. Mainly officials are often wondering, “Where do we even begin?”

Luckily, this guide will detail all you need to know about private sector partnerships and how they can provide many opportunities to raise city revenue for municipalities! These partnerships between the public and private sectors provide resources, new funds, and even new jobs to the community and local officials need to learn how to harness this. 

Fostering private sector partnerships takes effort and dedication from the local government, meaning municipalities must learn about the positive opportunities for revenue generation and how to capitalize on them. 

What Will This Guide Cover? 

  • The Importance of Private/Public Sector Partnerships
  • Best Practices For Establishing Partnership With The Public Sector
  • How To Raise City Revenue With Private Sector Partnerships  
  • What Private Sector Partnerships Can Help You Achieve 

Why Are Private/Public Sector Partnerships Important? 

Private/public sector partnerships are vital for the success of both parties because they combine the strengths of both sectors to deliver public services and projects more efficiently and innovatively for constituents. 

These collaborations leverage private sector resources such as expertise and technology that otherwise wouldn’t be available to government entities. Often these partnerships amend budget constraints and technical limitations faced by the local government. 

By dividing and even sharing responsibilities associated with completing projects for the community, these partnerships facilitate the timely completion of work, improve service quality, and foster economic growth (through job creation and infrastructure development). Ultimately, public/private partnerships are collaborative and have the ability to enhance public services, promote sustainability, and build public trust for the local government through accountability and transparency. 

Best Practices For Establishing Partnership With The Public Sector

1. Identify Opportunities for Collaboration

Local governments have the responsibility of researching and actively seeking out opportunities to collaborate with the private sector. There are various ways to engage with the private sector in the effort of project completion such as: 

  • Asset Leasing: Asset leasing allows local private entities to lease government-owned properties, facilities, or land for commercial use. These leases are a great and very low-maintenance way to generate revenue into your city as these buildings and public facilities are already owned by the government, and if they are being unused, the potential to raise funds by renting them out is logical and innovative. 

Check out GovPilot’s Vacant Property Management Software  designed specifically for this purpose. 

  • Advertising and Sponsorships: Allow private companies to sponsor public amenities or advertise on government property (e.g., buses, parks, public buildings) after paying a fee for the marketing opportunity. Local, commercial businesses need to advertise their services somewhere, and local businesses are likely looking for value marketing opportunities to capitalize on. The local government already owns public infrastructure that can be a hub for advertisements, and bring new revenue to the community. 

  • Public-Private Partnerships (PPPs): PPPs can collaborate on large infrastructure projects like transportation, utilities, and public facilities that provide opportunities for private businesses to lend their expertise, resources and skills to projects that will benefit your entire community. Also, hiring local businesses stimulates your local economy and even fosters job creation. 

2. Develop a Strategic Plan

Identify the services or projects in your community that could benefit from private sector involvement and craft a strategic plan for completing these projects. This means finding the right private sector partners for all aspects of the job, evaluating market demand, assessing the interest of the private sector in creating lasting partnerships with the government, and risk assessment. All of these steps should be taken for each new project that is being proposed for collaboration with the private sector. 

Read our guide to Government Strategic Planning here! 

3. Implement Best Practices for Partnership Agreements

Ensure that the partnerships you establish with the private sector provide value for the money you spend hiring workers, and meet public service objectives for your community. It is vital that local governments implement robust monitoring and evaluation mechanisms to track performance of workers and assess how fruitful your public sector partnerships are. 

Local government KPIs should be tracked to ensure that your project is meeting goals and timelines that you have set. Additionally, ensuring compliance with all necessary codes and inspection deadlines is equally important while engaging in these collaborations. 

Read GovPilot’s guide to Forming Local Government Mission Statement, Values, & Goals here!

How To Raise City Revenue With Private Sector Partnerships  

Public sector partnerships provide various opportunities to raise revenue, specifically when these steps are followed and the local government is dedicated to growth: 

  • Identify Revenue-Generating Opportunities

Commercial private companies in your area likely hope to work for and collaborate with your local government to complete community projects that the municipality can’t handle alone. 

Revenue generation opportunities don’t only include creating new infrastructure and completing infrastructure projects with private sector companies; Fundraisers hosted by businesses, ads shared by businesses for your upcoming events, and interest in becoming a vendor for an event are all additional ways to partner up with private sector companies!

Learn all about Boosting Revenue for Your Local Government: Strategies and Tips with our resource! 

  • Gauge Private Sector Interest

Engage with potential private sector partners to gauge their interest and gather insights into what they seek in a partnership. This step is vital to gauge which companies your local government would benefit the most from engaging with. From quality of work to prices to skills, many factors need to be identified before an informed decision can be made about selecting the right private sector partners. 

Learn all about Government Data Analytics here! 

  • Promote Economic Development Initiatives

Economic development initiatives are meant to enhance your government’s effectiveness in stimulating the local economy. Business Improvement Districts, also referred to commonly as BIDs, describe partnerships with local businesses in an attempt to fund and manage improvements in commercial areas, enhancing property values and generating tax revenue for your locality. 

Improving commercial areas in your locality and prioritizing these initiatives will not only improve your local public spaces, but also encourage constituents and businesses to rent properties and move to your city, paying the local government fees or taxes in both instances. 

  • Utilize Public Sector Vendors For Public Events

Allow vendors to set up their stands and business booths at local events to advertise and market their business or sell goods. These actions generate new customers for the local businesses and increase city revenue as additional businesses will be inspired to move to your community, and established businesses can entice new patrons. 

The involvement of local businesses as vendors for your community public events will also provide a great source of entertainment and enticement for citizens to engage with your events. 

Learn How to Manage & Improve Local Public Meetings & Events with GovPilot! 

  • Stay On Top Of Licensing and Permits

Your local government has the power to issue licenses to private companies for the exclusive rights to provide certain services, collecting fees or royalties in return as a trade. This will provide your city with more budget dollars and raise revenue while enticing customers to the businesses and giving them an edge in the competitive market.

Read more about How Permitting Software Works To Improve Your Local Government's Workflows

What Following These Steps Can Help You Achieve 

Follow these steps to ensure that local revenue in your community rises and you are doing everything possible to use these tips to capitalize on revenue generation: 

1. More Collaboration With Business Owners

Collaboration between the local government and business owners serves to show how supportive your municipality is of the hard working entrepreneurs in your community. It also strengthens bonds that ensure all future work collaborations with private sector businesses run smoothly and efficiently. 

Look into GovPilot’s Business Registration Software

2. Fostering Support For Local Businesses 

Local businesses are a vital part of what makes all of our communities so strong. They raise revenue, encourage constituents to get out of their homes, and provide livelihood for all affected by job creation in your municipality. When you support local businesses, you recognize the work that constituents put into your community to help foster a positive culture and make it so great! 

Learn Why Supporting Local Businesses Is Vital now!

3. Wider-Range of Constituents Reached 

Through the combination of ads or flyers the businesses share, outward support for the government, and opportunities for new jobs to be created, fostering private sector partnerships will improve constituent engagement in your community! The ripple effects of these partnerships are lasting, and reach far into the community, improving attitudes towards the government and even fostering upward mobility

Streamlining Constituent Services is vital! Learn how to accomplish it in our article. 

4. Stimulated Economy 

When you have a stimulated economy, the local government and constituents alike have more discretionary funds in their pocket to spread throughout the community. Stimulating your economy can be hard, as it is complex and has many moving parts, so these revenue generation tips to partnering with private sector businesses will be a game-changer for your locality.

Read about Tax Incentive Financing in Local Government now. 

Consider Private Sector Partnerships For Your Municipality

Local government officials should partner with local businesses in their communities to complete projects for their cities quicker, with more diverse expertise, and to patronize hard working citizens that own these businesses. To learn more about all of the ways a digital transformation and public/private sector partnerships can improve your municipality, book a consultation with GovPilot today! 

Public/Private Sector Partnerships FAQs

  • Why are private sector partnerships vital to the local government?

Local governments face countless constraints on their work between budgeting, resource allocation, and even expertise available in the public sector. All of these constraints and silos are addressed with public sector collaboration, as that sector faces less “red tape” and has the ability to access a wealth of resources that benefit the public sector. 

  • Why should governments leverage private sector partnerships to raise city revenue?

One of the best ways for municipalities to increase the revenue generated for the community is through collaboration with the private sector because of the countless resources this sector has access to. The projects completed through collaboration with both sectors are often more thorough and get completed quicker thanks to a lack of silos present in the competitive private sector. 

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Tags: Constituent Engagement, Government Efficiency, Constituent Experience, Digital Transformation