Some partnerships are ineligible for public funding because the private participation is mandated by law. CMAQ funds can not be used to help a private entity come into compliance with specific legal requirements, such as Clean Air Act or Energy Policy Act mandates. However, if the private entity clearly goes beyond the requirements, CMAQ funds may be used if the eligibility provisions are met. Furthermore, without public sponsorship or a contractual arrangement between a public agency and a private firm, CMAQ funds cannot be directed to the private sector. Public agencies interested in a partnership project need to consider several institutional and administrative issues.
Federal regulations are often a major challenge to people unfamiliar with the process.
Local match provisions, reimbursement conditions, environmental clearances, and other requirements apply regardless of whether a project is implemented by a public or private entity. Public partners need to consider contract administration issues, including the length of a contract, and legal recourse in the event of contract performance deficiencies. Private corporations interested in partnership arrangements need to be aware of program funding characteristics. Potential funding changes include annual appropriation levels or program cancellation. Private partnerships may need to produce satisfactory financial returns for shareholders, but these returns may be set by regulatory authorities in noncompetitive or monopoly market environments.