Working with Private Partners

1. Working with Private Partners NSW Community Housing Conference 2006 Hal Bisset Ward Bisset Consulting

2. 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

3. 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

4. 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

5. Types of partnership • Commercial contract • Preferred supplier • Community Business Partnership • Joint venture • Public Private Partnership

6. 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

7. 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

8. 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

9. NSW FHA Kits • Community-Business Partnership Kit • Large Scale Partnerships Toolkit