Recommendation for Small Concession (May 2026 Edition): The Achievement of the Three Steps × Four Cases in the MLIT-Cabinet Office Joint Guide
A structured breakdown of 'Recommendation for Small Concession: Guide for Utilizing Idle Public Facilities,' jointly published in May 2026 by MLIT Policy Bureau and Cabinet Office. Covers the three definitional elements of small concession, the effects on three actors, the organization of business methods, the three-step procedure (project concept review / project realization review / tender selection contract), and the achievements of four lead cases (Hagi / Komatsu / Kasama / Maizuru).
TL;DR
- Small concession is an effort to utilize idle public facilities owned by local governments (such as closed schools and vacant houses) in cooperation with private operators, aiming at solving regional issues and improving area value
- Three elements (familiar idle public facilities / small scale, i.e., project cost under about 10 billion yen / PPP/PFI project)
- Three-step procedure (project concept review / project realization review / tender selection contract); this guide emphasizes 'practice'
What Small Concession Is
In May 2026, MLIT Policy Bureau Social Capital Development Policy Division and Cabinet Office Private Finance Initiative Promotion Office jointly published "Recommendation for Small Concession: Guide for Utilizing Idle Public Facilities."
Small concession (hereinafter "small concession") refers to the effort of utilizing idle public facilities owned by local governments (such as closed schools and vacant houses) in cooperation with private operators, in order to solve regional issues and improve area value.
The purpose of this guide is twofold.
- Emphasize "practice" of small concession by including know-how from the project concept stage through the tender and selection stage
- Encourage challenges by local government staff and others who hesitate to utilize idle public facilities due to lack of know-how and experience
The positioning as a practice-supporting guide distinguishes it from earlier guides centered on system explanation.
Three Elements of Small Concession
Small concession is organized into three elements.
| Element | Content |
|---|---|
| Familiar idle public facilities | Vacant facilities such as closed schools and vacant houses such as old houses owned by local governments |
| Small scale | In principle, project cost under about 10 billion yen |
| PPP/PFI project | Project operation through public-private partnership starting with concession |
The scale of project cost under about 10 billion yen is an important threshold distinguishing this from the mainstream of PFI projects under the PFI Act (10 billion yen and above). It corresponds to the threshold of the MLIT Priority Review Regulation's target projects (10 billion yen and above for those including construction, manufacturing, or refurbishment).
Small concession is positioned not as a "small-scale version of PFI" but as a broad category that includes diverse methods (designated manager system, lease, concession, RO method, etc.) beyond the PFI Act framework.
Effects on Three Actors
The effects anticipated by small concession are organized for each of three actors.
| Actor | Anticipated Effects |
|---|---|
| Local government | Reduction of maintenance and operation costs / improvement of area value |
| Operator | Increase in business opportunities / long-term project operation / proactive contribution to the region, regional return, participation of regional companies |
| Region and residents | Regional revitalization, increase in exchange population / increase in convenient facilities / improvement in resident services / inheritance of facilities with attachment |
In particular, "inheritance of facilities with attachment" is an effect valued in closed school utilization cases. Small concession is positioned as a means to leave alma mater and historic buildings of local residents to the next generation without demolition.
Selection Axes for Business Methods
The business methods of small concession are organized in a two-axis matrix of facility public character and commercial character.
- High public character / low commercial character → Designated manager system etc.
- Medium public character / medium commercial character → PFI (concession, RO method)
- Low public character / high commercial character → Lease
The choice from these three types matches facility characteristics. Rather than "concession only," flexible method selection by case characteristics is anticipated.
Three-Step × 13-Item Procedure
The procedure presented by this guide is three steps. Each step consists of multiple items.
STEP 1: Project Concept Review
| Item | Content |
|---|---|
| 1-1 | Know the "now" of the area where the target facility is located |
| 1-2 | Know the "now" of the target facility |
| 1-3 | Get opinions from local residents |
| 1-4 | Summarize the project concept |
Starts with grasping the current state of the area and facility, then summarizes the project concept reflecting opinions from local residents. The positioning of local resident participation as an essential item of STEP 1 is a feature.
STEP 2: Project Realization Review
| Item | Content |
|---|---|
| 2-1 | Consider the business method |
| 2-2 | Consider the business period |
| 2-3 | Organize public-private risk allocation |
| 2-4 | Review the cost burden of private operators |
| 2-5 | Get opinions from private operators (sounding) |
The phase of organizing business method, period, risk allocation, and cost burden, then reflecting private opinions through sounding.
STEP 3: Tender, Selection, and Contract
| Item | Content |
|---|---|
| 3-1 | Conduct preparations for tender |
| 3-2 | Tender and select private operators |
| 3-3 | Contract |
| 3-4 | Implement the project with private operators |
The phase of practical procedures from tender preparation through contract conclusion and project implementation.
Four Lead Cases
The four cases detailed in this guide are selected with a balance of region, facility type, and business method.
CASE 1: Hon to Biyoshitsu Hagi (Hagi City, Yamaguchi Prefecture)
A case of utilizing an old house constituting the traditional townscape as a bookstore × beauty salon attracting people from inside and outside the city.
| Item | Content |
|---|---|
| Target facility | An old house with a 10m wide frontage in the Important Preservation District for Groups of Traditional Buildings "Hamasaki District" |
| Acquisition background | Originally individually owned; Hagi City received it as a donation considering large landscape impact if demolished |
| Business method | Concession method |
| Business period | About 20 years (September 2023 to March 2043, extendable to about 40 years with city approval) |
| Public-borne project cost | Preservation and improvement work about 64 million yen (subsidy used: Comprehensive Support Project for Vacant House Measures about 32 million yen) |
| Operating right consideration | About 16 million yen (free until end of March 2024, then operator pays the city over the project period) |
| Facility scale | Site area 367 m², total floor area 198 m² |
| Operator | Atashisha Inc. (out-of-city company) |
A design where Hagi City recovers half of the public-borne refurbishment cost through operating right consideration over 20 years. A proposal of "books and beauty salon" from an out-of-city company (Atashisha LLC at the time) was selected as matching the direction of the area. The operator opened the facility in July 2024, 11 months after contract conclusion, and effects such as settlement promotion and employment creation are also obtained.
CASE 2: Auberge Auf (Komatsu City, Ishikawa Prefecture)
A case of converting a closed elementary school into a "satoyama auberge" by a young top chef.
- In March 2018, "former Nishio Elementary School" in Kannonshita district of Komatsu City closed
- The school building had earthquake resistance secured through large-scale renovation in 2011
- The "Komatsu City Elementary School Site Utilization Review Committee" composed of academic experts and local representatives developed the basic concept
- Basic concept: "Satoyama Artist College: Toward a Hub Facility of the Environment Kingdom Komatsu Where Learning, Food, and Agricultural Experience Are Possible"
- Business method: Independent profit type designated manager system (no designated management fee paid)
- Refurbishment work was ordered individually rather than as a bundle of design, development, and operation, securing local company participation opportunities
- A regional revitalization plan was developed to utilize the national treasury delivery exemption system
A case combining closed school + independent profit type designated manager system to achieve regional revitalization while suppressing the financial burden on the municipality.
CASE 3: ETOWA KASAMA (Kasama City, Ibaraki Prefecture)
A case of converting a tourism facility with declining users into a glamping facility targeting companies and the young generation. A case linking tourism promotion with public facility utilization.
CASE 4: atick (Maizuru City, Kyoto Prefecture)
A case of converting an unused facility in an existing tourism area into a new complex commercial facility that did not exist in the city. A case combining the reconstruction of a tourism area with public facility utilization.
Other Lead Cases
In addition to the four detailed cases, the guide introduces lead cases nationwide along with a map.
| Case Name | Location |
|---|---|
| Opark OGOSE | Saitama |
| Yamagata Creative City Center Q1 | Yamagata |
| Sapporo Coffee House | Hokkaido |
| Iizuna Connect | Nagano |
| goodhouse | Nagano |
| Tachikawa Children's Future Center | Tokyo |
| Taura Tsukimidai Housing | Kanagawa |
| Maizuru Red Brick Park | Kyoto |
| THE 610BASE | Kyoto |
| MUSUBU AI, Miyawaka no Sato, Glosseria | Fukuoka |
| Takamiya Garden Saryo | Fukuoka |
| Nagono Campus | Aichi |
| NIPPONIA HOTEL Iga-Ueno Castle Town | Mie |
| Yukusa Osumi Sea School | Kagoshima |
| Globe Sports Dome | Okayama |
| Joka Koyado Kojiya | Okayama |
| ushimado TEPEMOK | Okayama |
By facility type, closed school utilization (Yukusa Osumi Sea School, Nagono Campus, Iizuna Connect, etc.), old house and historic building utilization (Hon to Biyoshitsu Hagi, NIPPONIA HOTEL Iga-Ueno Castle Town, Joka Koyado Kojiya, etc.), and public space utilization (Maizuru Red Brick Park, ushimado TEPEMOK, etc.) are mixed.
Use by Municipal Staff
Proceeding from STEP 1 in order is basic, but parallel or repeated execution by case characteristics is anticipated.
- Grasp the "now" of the area and facility (STEP 1-1, 1-2)
- Consolidate opinions from local residents (STEP 1-3)
- Summarize the project concept (STEP 1-4)
- Select the business method from three types (designated management / concession / lease) (STEP 2-1)
- Organize business period and risk allocation (STEP 2-2, 2-3)
- Review the cost burden of private operators (STEP 2-4)
- Reflect private opinions through sounding (STEP 2-5)
- Tender preparation (STEP 3-1)
- Tender and selection (STEP 3-2)
- Contract conclusion (STEP 3-3)
- Project implementation and monitoring (STEP 3-4)
Because the assumed scale is under about 10 billion yen, the difficulty is one staff can advance many tasks themselves. For items of higher difficulty (required service level documents, risk allocation, contract drafts), consider Hands-On Support and specialist utilization.
Use by Private Operators
Private operators considering participation in small concession projects move in the following flow.
- Grasp candidates for utilization of idle public facilities through municipal homepages and regional platforms
- Present opinions and ideas at the sounding stage (STEP 2-5)
- After tender opening, prepare proposal documents
- If selected, contract negotiation and business plan formulation
- After project start, contribution activities to the region and long-term project operation
As in CASE 1 Hagi, out-of-city companies can also be selected if proposals match the direction of the area. There is no need to limit to companies within the region; operators nationwide can apply for small concession projects.
Meaning of MLIT + Cabinet Office Joint Publication
This guide is jointly published by MLIT Policy Bureau Social Capital Development Policy Division and Cabinet Office Private Finance Initiative Promotion Office. Small concession projects are often treated outside the PFI Act framework (priority review target of 10 billion yen and above) because their project costs are under about 10 billion yen. However, Cabinet Office involvement also brings concession methods under the PFI Act into scope.
By jointly presenting the category of "small concession" by both ministries, municipalities can judge the use of PFI Act and the Local Autonomy Act, and the use of concession and designated manager system, with a single guide.
Summary
"Recommendation for Small Concession" jointly published by MLIT Policy Bureau and Cabinet Office in May 2026 is a practical guide for the effort to utilize idle public facilities owned by local governments (closed schools, vacant houses, etc.) in cooperation with private operators.
It defines small concession with three elements (familiar idle public facilities / small scale, i.e., project cost under about 10 billion yen / PPP/PFI project) and effects on three actors (local government / operator / regional residents). The business method is selected from designated management / concession / lease on a two-axis matrix of facility public character and commercial character.
The procedure is three steps × 13 items (4 items for project concept review / 5 items for project realization review / 4 items for tender selection contract). Four detailed cases (Hon to Biyoshitsu Hagi / Auberge Auf / ETOWA KASAMA / atick) and 17 nationwide lead cases plus many others maintain balance across facility type, business method, and region.
Because of the scale under about 10 billion yen, the difficulty is one municipal staff can advance many tasks themselves, but for items of higher difficulty such as risk allocation and contract drafts, a path combining Hands-On Support and specialist utilization is anticipated.
- Primary Source Library: MLIT PPP/PFI Guidance Series (May 2026 publication)
- Related guidance: This book is document 01 in the same archive (Recommendation for Small Concession Main Volume)
- Related articles: How to Conduct Market Sounding / Five Years of MLIT Hands-On Support / VFM Simplified Calculation Model Guide / Public-Private Dialogue and Operator Selection in PPP Projects