Public transportation in the United States was first developed by the private sector, starting with local and intercity coach (horse and carriage) services in the nineteenth century. Eventually it evolved into horse-drawn cars (trolleys) on rails, then electrified trolley and interurban transit systems. Many American cities initiated their electric service for homes and businesses on the spine of private trolley operations. Also, since many of the first trolley and interurban rail systems were developed to service real estate developments, the private sector had a significant hand in the creation and formation of many new towns and cities. However, by the late 1950's most transit systems were in decline and they were taken over by their respective local governments. Today, the primary public/private partnership is in the provision of transit service under contract. The municipal entity contracts for some or all of its bus, rail or demand responsive service with a private sector provider.
Another activity that continues is the development around public transportation facilities. Congressman Andrew Young of Georgia inserted language in the National Urban Mass Transportation Act of 1974 (Public Law 93-503) that made certain kinds of transportation projects eligible for Federal reimbursement. Specifically, Section 3(a)(1)(D) provided Federal assistance for:
"transportation projects which enhance the effectiveness of any mass transportation project and are physically or functionally related to such mass transportation project or which create new or enhanced coordination between public transportation or incorporate private investment including commercial and residential development..."
This kind of activity came to be known as "Joint Development" because it involved the joint use of public transportation property for development as well as public transportation service. Many communities are now using their transit stations and surrounding land for development. This may come about through a land sale to a private developer, but often it results from a partnership, where the transit agency builds part of a facility which the private developer finishes. The developer will pay the transit agency a market-based ground rent or provide a combination of rent and in-kind services.
In recent years, procurement has been an area of activity in which public-private partnerships could be fostered, as with Design-Build project development.