Challenges Facing P3s Are Political and Structural

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Challenges Facing P3s Are Political and Structural

by Andrew Ausel  |  July 22, 2015

The American Road and Transportation Builders Association (ARTBA) convened its 27th annual Public Private Partnership Conference in Washington D.C. last week, and DBIA had the privilege of being an exhibitor during the event. Through discussions with attendees and information gleaned during sessions, the conference revealed some of the key challenges facing the P3 industry today. With featured speakers including Transportation Secretary Anthony Foxx and Senator James Inhofe (R-Okla.), the conference was inevitably bound to include extensive dialogue on the Highway Trust Fund. But the discussion did not end there as much attention was also given to challenges faced by state legislators and public owners. While the challenges seemed to be many, the solutions appeared to be conscientious of the task at hand.

On the minds of many at the conference was the outlook for Congress to pass an extension of the Highway Trust Fund. To this end, the conference showcased the opinions of Senator James Inhofe (R-Okla.), Senator Ron Wyden (D-Ore.) and congressional staff from various congressional offices playing a key role in current discussions. The panelists overwhelmingly concluded that an extension of the fund until the year’s end is the most likely outcome at this point. But based on the feedback from Senator Wyden, it appears that the Senate maintains optimism for a long-term bill to pass this month while the House is more realistically aiming for the year-end extension.

Transportation Secretary Anthony Foxx spoke about the Department of Transportation’s efforts to advocate for an extension of the Highway Trust Fund, but he also addressed the President’s Build America Transportation Investment Center (BATIC). As a part of a government-wide initiative to increase infrastructure investment and economic growth by engaging with state and local governments and private sector investors, the BATIC program encourages collaboration and the expansion of the market for public-private partnerships (P3s) and federal credit programs. As a one-stop shop for governments, developers and investors, BATIC utilizes innovative financing strategies for transportation infrastructure projects. BATIC also helps bidders understand the financing options before they come to the bidding table, which was a topic addressed by the three panelists from the Treasury Department who discussed the privacy and competiveness concerns that accompany such increased collaboration.

While structural challenges face many of the federal agencies, the political challenges of P3 legislation were addressed by a panel of state legislators. State Representative Ed Soliday (R-Indiana), State Delegate Tom Rust (R- Virginia), State Representative Leslie Combs (D-Kentucky), and State Representative Max Tyler (D-Colorado) reflected on the session that was and the stories of P3 legislation in their states. In Kentucky, Representative Combs pointed out that the most conservative members from northern Kentucky were the loudest opposition to P3s in their legislature this session, while the panelists all highlighted the challenge of dealing with a patchwork of different state laws that inhibited interstate road projects.

While mainly highlighting the challenges discussed during the conference, many victories were also noted; for example, the promotion of alternative delivery methods by the Executive branch and the work that is being done to open private equity to traditional municipal bonds.  But it is important to remember that the use of P3s is still expanding in the U.S. and while the ARBTA P3 conference affirmed the value of P3s, it also provided a key reflection on the kinks that have yet to be worked out.