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New Legislation Seeks To Expand Scope Of Public-Private Partnerships

In the face of failing or outdated infrastructure, public-private partnerships offer a glimpse of hope. These agreements have become increasingly touted as the solution for the country’s public financing woes. Indeed, the current administration’s forthcoming infrastructure plan is expected to rely heavily on P3s.

There are limits to what P3s can accomplish, though. While they’ve been implemented successfully in transportation projects, public buildings are a different story. Because these buildings aren’t eligible for federal tax-exempt facility bonds, governments haven’t been able to bring sufficient leverage to the table. This has resulted in poorly maintained facilities across the U.S.

At Infrastructure Week 2017, Representatives Mike Kelly, R-Pa., and Earl Blumenauer, D-Ore., discussed their plans to change that. Speaking at a panel moderated by CNBC’s Brian Sullivan, the two congressmen discussed the Public Buildings Renewal Act of 2017, of which they’re co-sponsors. This legislation, currently pending in Congress, would expand the use of P3s by creating a tax-exempt bond for local governments to use in public building projects.

“We’ve turned a blind eye to Infrastructure for too long,” Kelly said during the panel.

Allowing for the use of P3s in these circumstances would help alleviate often-overworked or understaffed local government entities. In addition to alleviating government resources, these deals would transfer the risk of a project to the private sector.

Payments to private partners would be delivered based on performance, so there’s a greater incentive to complete a project on time and on budget.

“If they’re not performing, they very quickly lose their payments,” Michael E. Pikiel, Head of Infrastructure, Mining and Commodities in the U.S. for Norton Rose Fulbright, said.

Pikiel, who spoke on the panel during Infrastructure Week, noted that the structural protections embedded in properly designed P3 contracts don’t just ensure accountability, but drive innovation. Successful P3s include performance metrics that hold the contracted party accountable for the continued O&M for a given project, so private entities design projects in a sustainable and efficient fashion for their own benefit as much as their partner’s.

“Performance and efficiency requirements will drive efficiency in design and construction,” Pikiel said.

The panelists touted the benefits of P3s throughout the morning, and not to deaf ears. As Samara Barend, Senior VP of North America Strategic Development Director for Public-Private Partnerships at AECOM, said, bipartisan support of the Public Buildings Renewal Act is strong – a rarity in today’s political climate. Overall, ten members of Ways and Means are sponsoring the bill along with five members from the Finance Committee.

“There’s unprecedented support for this session of Congress within Ways and Means and Senate Finance, which are the two committees of jurisdiction,” Barend said. “We think that this bill has more support from relevant committees of jurisdiction than any other infrastructure bill pending in Congress right now. It sets a good example of what’s possible in an infrastructure package.”

#roads #transportation #funding #national #legislative