Planners Must Carefully Choose Joint-Venture Partners

Planners must carefully choose and negotiate partnerships before beginning design of joint-venture facilities.

In Sherwood, Ore., a partnership between the city and the Columbia-Willamette YMCA has created what otherwise may have been impossible-a community-based indoor recreation facility called The Sherwood Family YMCA.

The city had the land and capital resources to build the center, but neither the desire nor expertise to operate it. The YMCA saw the need for an additional facility in the area, and had plenty of experience in running similar facilities, but had limited capital resources. Out of this, a partnership was born. But, as with any joint-venture facility, a substantial amount of up-front negotiating and planning was required prior to even beginning the project.

As an ever-increasing number of public recreation facility projects include some form of partnership with other communities, public entities, nonprofits and even for-profit organizations, the need to thoroughly plan and prepare before launching into the design and construction phase becomes more crucial.

The vast majority of public recreation center projects now begin with the completion of a comprehensive feasibility study that defines the basic needs, expectations, scope and financial requirements of the project. This is the time when potential partnerships should be identified and explored. Almost without exception, a partnership will have a profound impact on the overall feasibility of a project. Waiting until after the study is complete to pursue partnership options will often render much of the study's information useless, or at minimum, require a considerable amount of rework.

If identifying a partner is not possible by this point, it has to be accomplished before the design process begins if the partner is to have any input in the facility's components, layout or design. Garnering capital contributions from a partner for the building's development after the design process has been completed is nearly impossible. Once construction has actually begun, the opportunities for partnerships on a significant scale are almost nonexistent.

There are exceptions. At the recently opened Friendship Community Center in Lower Paxton Township, Pa., the planning process for the center had progressed well into the design development phase before a health-care partner came forward. Even this late in the process, it was still possible to build a dedicated space for the partner's needs, but the integration of its area into the rest of the center was less than ideal. While this partnership is proving to be successful despite its late start, the dynamics would have been better if the process had begun earlier.

But simply identifying a partner early in the planning process is not enough. There needs to be a clear understanding of the potential partner's goals and expectations both for developing and operating the facility. It is highly possible that the partner may not have a welldefined goal in mind at the beginning, or may not be totally aware of the opportunities that partnering may bring. In addition, the partner's limitations and legal requirements will need to be clearly understood. This is especially true regarding financial capabilities and operational control issues.

Opening a dialogue and having indepth discussions with all project partners is essential but often difficult to accomplish. To mention one recent attempt, a partnership between a city and a hospital has been stymied in part by unrealistic expectations from the city concerning the magnitude of the combination community rec center-hospital wellness facility, the level of capital contributions from the hospital and the anticipated financial obligations of the city for the operation of its portion of the building. Without a successful resolution to these problems, the partnership is liable to collapse before it even begins. To avoid such difficulties and help identify other potential stumbling blocks to establishing a formal partnership, it is sometimes best to bring in an independent third party to lead and facilitate the process.

One major expectation that needs to be addressed is the desired level of teaming. Partnering is a broad-based concept that can move along a continuum from the simple promotion of each other's facilities, events and activities to joint programming and service delivery to coordinated development and operation of facilities. The commitment and direct involvement in the partnership (not to mention financial implications) obviously go up as the level of teaming becomes more intertwined.

The more partners that are brought into a project, the more difficult it becomes to establish and carry forth the vision. In the Minneapolis metropolitan area, a study is being conducted for three suburban communities and a school district to determine the feasibility of building a joint recreation center, but it is moving along slowly due in part to the number of potential partners involved. The process is further complicated because of differing visions and levels of commitment to bringing the project to fruition. At some point, the number of partners may need to be reduced to include only those committed to moving the project forward.

The greatest obstacle to arriving at an agreement, however, always seems to revolve around money, not only to build the center but to operate the facility on an ongoing basis. While two potential partners may seem to be compatible and may have established a basic agreement on the project's goals and expectations, the money issue often results in the failure of what was once seen as a promising partnership. If the project requires a partner to provide capital and/or operational dollars, this must be conveyed during the first steps in courting a potential partner. Moreover, efforts to address financial issues should not overlook overall operational issues. Focusing on the capital requirements necessary to make a particular project a reality is often where discussions begin and end, while the more difficult but more farreaching issue of ongoing operation of a facility remains unresolved. Make no mistake, the level of financial commitment to the project by each partner will dictate the degree of input and control partners will ultimately wield in the development and operation of the facility. Money equals control, and as a result needs careful consideration by all parties involved. Once the money question is answered, it is usually much easier to tackle operational issues associated with priorities of use, operational responsibility and integration of program and service delivery.

This should ultimately result in the signing of an agreement to partner before the project enters the design stage. Failure to forge such an agreement can greatly complicate matters in the long run. But despite the obvious need to have a partnership agreement in place, it is amazing how many recreation center partnerships are based on an "understanding" or a handshake between two entities. A center in the western United States that is one of the more prominent examples of a successful partnership between two agencies still does not have a formal signed partnership agreement, despite being open for more than a year.

The staffs of both agencies have worked very hard to make the center work, but a breakdown in the future would not have the benefit of a long-term agreement to fall back on. Before a formal agreement can be drawn up, however, all the issues associated with the development and operation of the center need to be identified and resolved for inclusion in the agreement. Failure to adequately define all the necessary issues in an agreement will severely limit the ability of the document to support the project over time. One of the most frequently asked questions is what should be included in a partnership agreement. While the particulars vary by project and depend on the partners involved, several basic areas are usually included in a partnership agreement. It should be remembered that any agreement should ultimately protect the interests of each partner.

First, partners must decide who ultimately owns the facility and equipment, and whether ownership will change or revert to one partner over time or at the end of the agreement. In addition, the agreement should address not only the initial capital requirements for developing the facility, but also the long-term capital investments associated with repairs and upkeep, as well as possible future expansion. It is critical that operations funding be dealt with independently of capital funding. Partners often assume that a substantial capital contribution or donation of land up front will buy them free use of the center for the life of the facility, without additional payments for operations. However, many facilities operate at a significant deficit on an annual basis, and over the course of an agreement, the level of operating deficit could vary substantially. The agreement should be flexible enough to address this issue and still provide for realistic budget targets for each of the partners. The greatest variance among agreements is usually found in the area of operations.

One of the first issues usually addressed is the establishment of an operating structure or board. In a true partnership where all parties have equal standing, establishing a board with representation from all partners may be necessary. When there are more than two partners involved, it is almost a must. Determining how the board will be formed, the authority it will have and the procedures under which it will operate becomes crucial. A second issue is the definition of operational responsibilities for each partner. Responsibility for various aspects of operation-such as maintenance, staffing, marketing and scheduling - must be clearly outlined to avoid duplication of effort, potential financial problems and friction between partners.

In particular, the need to have a comprehensive marketing plan is increasingly being recognized. With several partners involved, determining who will establish and coordinate this effort is essential. Like everything else, there will be differing needs and goals, and budgets available for marketing will vary, but some wonderful opportunities for cross-marketing should exist and be fostered. Finally, it is imperative to develop a process for establishing a complete operating budget, with monitoring and review procedures, along with guidelines for setting a fee schedule. Partners must decide not only on expense allocation, but also how to share and account for overall facility revenues. Within operations issues, there are several decisions to be made regarding personnel and maintenance of the facility.

The key to the successful operation of any recreation facility starts with a well-defined staffing plan that identifies all necessary full-time and part-time positions, specific job responsibilities, a supervisory structure and a marketdriven compensation package. These issues can be complicated when several partners are directly involved in a center's operation, and each has staff members present in the facility. Moreover, with multiple entities involved in the development and operation of the center, the need to have well-established performance guidelines in place is crucial. Maintenance expectations, for example, may vary between partners. An agreement must be made on how the facility will be cleaned and maintained. This is not just about day-to-day cleaning of the center, but also how long-term maintenance and capital replacement will be handled.

Trouble often begins with program and service delivery. It is likely that each of the partners involved became interested in the project so they could provide programs and services to their respective client base. The major challenge in coordinating program and service delivery is minimizing confusion and uncertainty among users. Directly related to this is establishing clear guidelines for priority of use of the facility in general and specific components in particular. These priorities could vary by season of the year, day of the week and time of day.

Determining the length of time the partnership will be in existence is a major aspect of most agreements. The majority of partnerships have an initial time frame identified that is dictated in part by the level of financial involvement of the partners. The greater the financial contribution, the longer the agreement will need to be to ensure that the value of the investment can be recouped. Partnership agreements that have a significant financial commitment (greater than $1 million) will usually have a length of time of at least 10 years to as long as 20 years or more. Often the agreement can be automatically renewed for a set period of time (usually a shorter length than the original contract) at predetermined points during the contract. However, despite the best intentions and planning, not all partnerships work out.

Thus, there should be some mechanism in place to allow for a partner to terminate the agreement without having to wait until it expires. This is often difficult when significant capital and operational dollars are involved. Often one partner will have to buy out the other, or another partner will have to be found to take the departing partner's place. Language must be carefully written, or the remaining partner and the center itself could face severe hardship. Last, the agreement must address discussions of the progress of the partnership and the facility itself. Agreements must pay careful attention to developing procedures for handling possible disputes. Whether simple everyday operational issues or larger philosophical differences, disagreements can have farreaching effects on the facility's operation.

A well-defined process to handle disputes must be clearly identified and have predetermined steps in the treatment of such problems. The final step is often to have a previously agreed-upon arbitrator or mediator who will ultimately have binding authority over the matter. A final area often overlooked in agreements is the commitment to have systematic reviews and evaluations of the facility and its operation as well as the agreement itself. This ensures that the center is being effectively managed and operated and allows for adjustments to be made to the agreement to address changes that occur over time.

Writing a comprehensive and thorough partnership agreement is no easy task and often will take a considerable amount of time to acquire a legal review, agreement on specific language and final signatures. Adequate time needs to be allocated in the planning process for this to occur so that the progress of the project itself is not adversely affected. Moreover, depending on the personalities of the leaders involved, there can still be land mines in the process. Due to the strengths and weaknesses of individuals, there can be a tendency for one partner to try to upstage the other or redirect the process, which can often result in one partner steamrolling another or the project being altered in a negative way.

In a community in the Midwest that spent a considerable amount of time and effort to develop a partnership between a city and the local school district, the whole process almost unraveled when one of the entities had several leaders who were aggressively attempting to influence the project. While the center moved forward and was ultimately successful, certain aspects of the center were forever compromised as a result.

With a well-designed planning process and a strong agreement in place, the project has the proper foundation from which to move into the design and construction phase. A team approach from this point forward is essential if the project is to be successful for each of the partners, and more important, the user groups it will serve. Such an approach must be gained through detailed discussion, careful negotiation and plenty of planning beforehand. The ultimate goal of any partnership should be to provide a seamless product for the public. For this to occur, would-be partners must take the time to plan and prepare before leaping into a partnership.