Advantage of Developing the Waste Management Facility in This Scenario
Furt urgently requires a new waste management facility, with plans already in place for a modern complex including a recycling center. However, construction at Rezatstraße industrial site in Furt harbor has not commenced due to financial constraints and budgetary law restrictions preventing the necessary debt for financing. The Green faction is considering alternative financing methods, such as third-party advance financing of investment costs.
Concerns surround the construction and third-party financing model, despite assurances from Green councilor Harald Riedel that the "defect-free" handover of the completed building complex to the city of Furt will eliminate construction risks and any financial risk in the form of advance payments. The operation of the waste management, including employees, vehicles, and fee regulations, will remain under the city's control.
The GREENS faction has emphasized that this financing model is different from a full public-private partnership (PPP), resembling a "design-build" approach. However, doubt persists among even some Green party members about the merits of PPPs, given Furt's history with the planned sale of the water network. Harald Riedel insists that the waste management center project will not follow the same path, and that the alleged arguments against the "design-build" approach do not reflect the proposed solution.
Experts predict that the project could be between 11% and 16% cheaper with the proposed financing form, compared to the city financially and constructing the project itself. The council's decision allows for the preparation of a Europe-wide tender for outsourcing, with the final decision on construction to be made after the tender process.
The new facility will consolidate Furt's waste management departments and facilities, freeing up space in the municipal yard and Süd office building. Specific plans include a recycling center, administrative and social buildings, workshops, vehicle and paper handling halls, and used goods halls.
While third-party advance financing typically involves a third party providing upfront funds with the expectation of repayment plus interest, specific details on its application in Furt's waste management center are not available. In contrast, a full public-private partnership (PPP) involves a long-term agreement between a public entity and a private sector company, with the private partner responsible for design, construction, operation, and maintenance over a specified period. The key difference between these models lies in risk sharing, operational control, and repayment terms.
The business model being considered for Furt's waste management facility is different from a full public-private partnership (PPP), more akin to a "design-build" approach, as the GREENS faction emphasizes. Despite this, there are concerns about the merits of third-party advance financing due to past experiences, particularly in relation to Furt's planned sale of the water network.
