Why the Toyoake Model Attracts Attention
The significance of early adoption at population 70,000 against a 17.3% formulation rate
Unit costs and amounts in financial examples without a cited source are illustrative assumptions, not statistically established market rates. Use estimates and comparable records appropriate to the target facility, location and business when preparing a project plan. Distinguish these assumptions from cited statistics and case expenditure.
Population of Toyoake City, Aichi Prefecture (2025 Census preliminary figure, as of 1 October 2025)
68,382
Priority Review Procedure formulation rate for populations 50,000–100,000, the band Toyoake belongs to (end of March 2025; 41 of 237)
17.3%
Same rate for populations 200,000+ (end of March 2025; 92 of 112)
82.1%
When Toyoake established its Priority Review Procedure
FY2018
Not verified against a primary source; see this article's premise note
The Priority Review Procedure for PPP/PFI is an in-house rule, based on the Cabinet Office guidelines, requiring municipalities to "first consider" the possibility of private sector utilization for public facility projects above a certain size. Under the guidelines revised on 4 June 2025, the range of municipalities asked to formulate a procedure widened from population 100,000 to population 50,000.
However, actual formulation status is heavily skewed.
Among municipalities with populations of 200,000 or more, 92 of 112 (82.1%) have established a Priority Review Procedure, while the band Toyoake belongs to, populations of 50,000 to 100,000, stands at 41 of 237 (17.3%). For populations under 50,000 the figure is 42 of 1,227 (3.4%). With the lowered threshold significantly expanding the scope of eligible municipalities, a substantial gap remains between "municipalities covered by the rule" and "municipalities with the organizational capacity to formulate one."
Within this gap, Toyoake City — a municipality of roughly 70,000 residents in Aichi Prefecture — established its Priority Review Procedure in FY2018 and has since accumulated operational experience. The case has been repeatedly introduced in Cabinet Office explanatory seminars (held in FY2023). Why can some municipalities formulate the procedure while others cannot? Toyoake's approach embodies a set of design choices that enable a small municipality to actually use the rule, rather than relying on organizational scale.
Naming Strategy — "Private Sector Utilization Projects" Instead of "PPP/PFI"
A terminology choice that bridges jargon fatigue and organization-wide adoption
The most distinctive feature of Toyoake's approach is the in-house terminology. Rather than "PPP/PFI", the city uses the term "Private Sector Utilization Projects" (民間活用事業).
Why Change the Name?
"PPP/PFI" is a common term for staff trained in PFI law and related frameworks. But for frontline staff outside the planning and finance departments — facility management, operations, welfare, education — it is easily perceived as "specialist jargon unrelated to my work." The abbreviation "PFI" in particular is often associated with large-scale projects like concessions, creating a sense of distance for small-municipality staff ("This doesn't apply to us").
The phrase "Private Sector Utilization Projects" sidesteps this jargon fatigue and produces several practical effects:
- Natural scope expansion: Designated manager, comprehensive management, Park-PFI, design-build bundling, and PFI Act projects can all be encompassed by a single phrase — "projects that utilize the private sector"
- Lower psychological barrier for frontline staff: "Utilizing the private sector" is an action any department can envision
- Easier explanation to councils and citizens: No need to expand abbreviations; the purpose is conveyed in one phrase
Terminology Shapes Organizational Behavior
Language frames thought. "PPP/PFI review" sounds like a task for planning and finance; "Private Sector Utilization Project review" positions the work as a natural extension of each department's day-to-day duties. Toyoake's terminology choice is not wordplay but an institutional design for cultivating organization-wide ownership.
The Three-Part Organizational Design
Roles of Promotion Office, Review Committee, and Project Advisor
Toyoake's Priority Review Procedure is operationally supported by three organizational elements.
1. Private Utilization Promotion Office
A dedicated unit within the planning department that functions as the command center for private sector utilization projects. It cuts across departmental silos, maintaining horizontal visibility of facilities and projects owned by each division and routing them through the Priority Review Procedure.
Small municipalities rarely have the resources to staff a dedicated unit, so "PPP/PFI" is typically handled as a side duty by planning staff. The significance of Toyoake's "Promotion Office" label is that it clearly signals, both externally and internally, the existence of a continuous body driving the initiative.
2. Private Utilization Review Committee
A committee, including external members, that deliberates case-by-case on whether and how to pursue private sector utilization. It brings external knowledge into the Priority Review Procedure, rather than relying solely on internal judgment.
External participation delivers several effects:
- A brake on "precedent-based thinking" that internal logic alone cannot escape
- Feasibility assessment from the perspective of private operators
- Enhanced transparency and accountability to council and citizens
3. Private Utilization Project Advisor
An external specialist appointed as a special-service staff member, providing advice from the earliest stages of individual cases. Whereas the Review Committee functions as a forum for "deliberation", the Advisor serves as a "walking-alongside" presence.
The point at which small municipalities most often stumble is the initial judgment: "Which facilities and projects should be subject to priority review? Which method is realistic?" Embedding external knowledge at this stage on an ongoing basis reduces dependence on individual personal knowledge.
Lower Project Cost Thresholds
The intent behind setting thresholds below the national baseline
A Priority Review Procedure specifies the project cost threshold above which the procedure applies. The Cabinet Office guidelines cite, as an example, construction cost of ¥1 billion or more, or annual operating cost of ¥100 million or more.
Toyoake has adopted thresholds below this national baseline. According to Cabinet Office seminar explanations, the city uses thresholds around ¥100 million (construction) and ¥30 million (annual operation).
Why Lower the Threshold?
For a municipality of around 70,000 people, construction projects at the ¥1 billion scale occur only once every several years — or even once per decade or more. Adopting the national baseline verbatim would lead to a situation where "no projects are actually eligible for priority review." The procedure exists on paper but never operates — it becomes a formality.
Lowering the thresholds produces several benefits:
- Mid-to-small projects become eligible: HVAC upgrades at schools, welfare facility renovations, bundled management of multiple facilities, etc.
- The procedure is triggered several times a year, allowing the organization to accumulate operational know-how
- Private operators receive a signal: "This municipality considers private sector utilization even for mid-scale projects"
Thresholds Should Match the Municipality's Scale
The national baseline is merely "an average benchmark that includes large cities." When a small municipality adopts it as-is, the rule diverges from reality. The Toyoake case illustrates the principle that threshold design should be calibrated to the municipality's actual project size distribution.
Designated Manager Renewals in the Review Scope
Institutionally capturing existing-facility review opportunities
Another distinctive feature of Toyoake's operation is that designated manager renewal timings are, as a matter of principle, included in the Priority Review scope.
Designated Manager Renewal as a Review Opportunity
In many municipalities, designated manager contracts are renewed on roughly five-year cycles. Renewal is both a procurement moment and a rare opportunity to revisit "how this facility should be operated going forward." In practice, however, the default drift is "re-tender under the same specifications."
By routing designated manager renewals through the Priority Review Procedure — as Toyoake does — the following questions arise as institutional requirements:
- Is continuing with the designated manager model appropriate, or would another approach (comprehensive management, concession, repurposing, consolidation) be better?
- Is there room to bundle multiple facilities into a single procurement?
- Should a user-fee system be introduced? Is there scope to expand self-generated revenue activities?
Procedures That Cover Only New Construction Do Not Move
Priority Review Procedures are often imagined as relevant only to "new construction of major facilities." In small municipalities, however, new construction is rare, and the real battleground is stock management. Including designated manager renewals in scope is a practical design choice that dramatically increases how often the procedure is actually exercised.
Comprehensive Facility Management in Practice
Bundled maintenance contracting with small-start, staged-expansion
Toyoake is also known for its practice of comprehensive facility management outsourcing — bundling maintenance, repair, and inspection of multiple facilities under a single private-sector contract. Cabinet Office seminar materials describe a staged approach: starting small and gradually expanding the scope of facilities covered.
The Meaning of Starting Small
If comprehensive management is applied to all facilities at once, the burden of specification drafting, operator selection, and internal coordination piles up simultaneously. For small municipalities, this initial load alone can cause a project to stall.
Toyoake's approach begins with a limited set of facilities and expands the scope once operations stabilize. This yields several advantages:
- First-year failure costs are contained
- Operational know-how accumulates while scope expands
- Relationships with private operators are built through a trial phase
Comprehensive Management as a Symbol of "Private Sector Utilization"
Comprehensive facility management outsourcing lacks the visibility of PFI Act projects but is a realistic, measurably effective approach for small municipalities. Framing it under the "Private Sector Utilization Projects" umbrella creates a foundation where unglamorous, practice-oriented private-sector collaboration receives proper recognition.
Implications for Other Municipalities — Four Implementation Points
Four implementation points small municipalities can adopt
From the Toyoake Model, here are four implementation points that municipalities under 200,000 can adopt.
1. Change the Terminology — "Private Sector Utilization Projects" as the Entry Point
Trying to make "PPP/PFI" the in-house common language stalls discussion at the terminology barrier. Replacing it with plain Japanese that directly expresses the purpose ("Private Sector Utilization Projects", etc.) broadens the range of participants in the discussion.
2. Design the Organization in Three Parts — Office, Committee, Advisor
Even without a dedicated unit, it is important to build a structure in which someone takes on each of the following three roles:
- Secretariat function (a body that aggregates cases and tracks progress)
- Deliberation function (external committee members, so deliberation does not close inside the organization)
- Accompaniment function (an external specialist who can advise on individual cases)
3. Calibrate Cost Thresholds to Your Municipality's Scale
Instead of copying the national baseline, set thresholds at a level where priority review is actually triggered several times a year in your own organization. The meaning of the procedure lies not in "what is written down" but in "what is actually operated."
4. Capture Existing-Facility Review Opportunities Institutionally
Include milestones related to existing facilities — designated manager renewals, major renovations, revisions to long-life planning — in the Priority Review scope. If only new construction is covered, the procedure will operate only once every several years.
Summary
The Toyoake Model demonstrates that "the Priority Review Procedure can be effectively operated not through organizational scale but through design and operational ingenuity." Within the gap where only 17.3% of municipalities in its own population band have established the procedure, a municipality of 70,000 was able to move ahead precisely because it designed the naming strategy, organization, thresholds, and scope of operation to fit its own reality.
The June 2025 guideline revision widened the eligible scope to municipalities with populations of 50,000 or more. For newly eligible municipalities, Toyoake serves as a leading example of the importance of "tailoring the institution to oneself" rather than "imitating large cities."
Related Articles
Optimal PPP/PFI Method Selection by Municipality Size
Method selection guide from populations under 50,000 to designated cities
PPP/PFI Introduction for Municipal Officials
From PPP vs. PFI to the full landscape of seven methods
Public Facility Management Practical Guide
End-to-end practical coverage of planning, inspection, life-extension, and comprehensive management
What to do next
When considering PPP/PFI, review the facility conditions and the municipality's rules.
| # | What to check or consider | Responsible team or contact |
|---|---|---|
| 1 | Check the project's cost against the national reference thresholds of ¥1 billion for projects including construction and ¥100 million a year for operation-only projects, and against your municipality's rules | Budget team |
| 2 | Check the municipality's priority review rules. If none exist, consider developing them with reference to Cabinet Office guidance | Planning team |
| 3 | Check whether user charges are collected and assess expected income. For facilities that can charge users, also examine concession requirements | Departments responsible for each facility |
| 4 | Compare applicable methods using project cost, facility type and expected user fee income. Park-PFI may be an option for urban parks, and small concessions for idle facilities | Responsible department and planning team |
| 5 | Choose a facility to pursue and ask private operators about their interest and project requirements | Market sounding |
Check project cost and the municipality's rules to establish whether priority review applies, then compare methods suited to the facility's use and expected income.
References
Guidelines for the Formulation and Operation of the Priority Review Procedure — Cabinet Office Private Finance Initiative Promotion Office (2022)
PPP/PFI Promotion Action Plan (Revised 2024 Edition) — Cabinet Office Private Finance Initiative Promotion Office (2024)
PPP/PFI and Private-Sector Utilisation Projects — Toyoake City, Aichi Prefecture (2024)
