Filling The Infrastructure Pothole With Public-Private Partnerships

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Filling The Infrastructure Pothole With Public-Private Partnerships

by Andrew Ausel  |  July 9, 2015

Senator Ron Wyden (D-OR) and Senator John Hoeven (R-ND) have come up with a proposal to provide some of the funding for the Highway Trust Fund through investments in public-private partnerships (P3s). This proposal, referred to as the Move America Act, was the impetus for their discussion Wednesday at the Bipartisan Policy Center that was titled Innovative Financing: Filling the Infrastructure Pothole. During the discussion, the Senators championed their proposal, boasting bipartisan support and a rave review from a congressional tax review committee.

The specifics of the Move America Act provide up to $180 billion in tax-exempt bond authority and up to $45 billion in infrastructure tax credits to States over the next 10 years. The bill also allows flexible public-private partnership arrangements for roads, bridges, ports, rail and airports. “Here is an opportunity to build on what works,” remarked Senator Wyden. “The majority of infrastructure in America is built at the state and local level and financed using the municipal tax-exempt bond market. The problem is that market doesn’t work very well for the private sector because of the tax code.”

Senator Wyden noted that the Joint Committee on Taxation, a nonpartisan committee charged with the duty of preparing official revenue estimates of all tax legislation considered by Congress, recently estimated that the Move America Act would leverage $226 billion worth of infrastructure projects from its investment of $8 billion in funding. “Whether it’s the gas tax, whether its repatriation, or any of the approaches that are on the table; this is a number produced by the official score keeper,” said Senator Wyden, exhibiting his confidence in the figure.

While fielding questions from the moderator and attendees, the Senators were unable to reflect positively on the outlook for the passage of a long-term extension of the Highway Trust Fund this month. When asked about the likelihood of a long-term extension getting enacted in July, Senator Hoeven stated, “The likelihood is that we see an extension until the end of the year, perhaps before we go out this month.” He also discussed the potential of a two-year extension but favored a year-end authorization in order to, “keep this pressure on to get a six year bill.”

Both Senator Wyden and Senator Hoeven took time to highlight the expediency of P3s, which almost always involve using design-build as the delivery method. “By accelerating construction, you save money,” stated Senator Hoeven. As the debate heats up on how to create revenue for the Highway Trust Fund, proposals such as the Move America Act are a step in the direction that the Design-Build Institute of America is interested in seeing. As proposals to make construction more affordable and efficient develop, making a case for design-build is even easier.