Partnerships between public agencies – federal, state, and local – and private companies are an increasingly popular infrastructure financing policy tool. As public budgets continue to be squeezed; public-private partnerships (P3s) allow planners and policymakers more breathing room to invest. P3s can be an effective financing mechanism through tools such as municipal and private activity bonds, private tolls, or asset recycling. These partnerships can then take many forms including Operation and Maintenance P3s, Design-Build P3s, Design-Build-Operate P3s, and Design-Build-Operate-Transfer P3s.
Although there are positive financing opportunities provided by P3s, they do not replace the need for public funding of infrastructure projects and are not a one-size-fits-all model. There are no standard criteria for awarding and implementing P3s and many financiers are unattracted by the return on investment, which can lead to investment not based on need but on financial return. Additionally, each state’s laws on P3 investment vary, ranging from no authorizing legislation to allowing for P3s in infrastructure investment.
Simply put, P3s are a tool in the toolbox to fund infrastructure investments and are not the only option. All levels of government and the private sector must share in increasing infrastructure investment. Moreover, federal participation must be at the center of investment if we are to restore America’s world-class infrastructure.
As the Trump Administration and Congress continue to develop infrastructure investment legislation, we urge lawmakers to support a multi-investment approach that includes heavy federal involvement, state and local participation, and P3 options.
Our nation’s infrastructure cannot be repaired and modernized on private investment alone. If the United States is serious about achieving an infrastructure system fit for the 21st century, we must recognize P3 limitations and continue to encourage strong federal support.
This post is part of a series in anticipation of a White House proposal on infrastructure investment. Read part one of the series on ASCE’s Principles for Infrastructure Investment here and part two on Federal Investment in Infrastructure: A Mutually Beneficial Relationship.