Last week the Transportation and Infrastructure Committee’s Panel on Public-Private Partnerships (P3s) released its final report and recommendations on how to balance the needs of the public and private sector when using P3s to finance infrastructure projects. The Panel was formed in January to examine the current use of P3s across all modes of transportation, public buildings, water, and maritime infrastructure, with the goal of ensuring that federal policies unlock the potential of P3s to strengthen our nation’s infrastructure while protecting the public interest.
“Billions of dollars of infrastructure needs in the U.S. are in search of funding, and well-executed public-private partnerships can enhance the delivery and management of infrastructure,” Panel Chairman Rep. John J. Duncan, Jr. (R-TN), said. “P3s cannot provide the sole solution to all of the Nation’s infrastructure needs, but they can offer significant benefits, particularly for high-cost, technically complex projects that otherwise may risk dying on the vine.”
The Report devotes a full section to water and wastewater treatment systems, noting that because our country’s water infrastructure is “aging, deteriorating, and in need of repair, replacement, and upgrading,” the needs of municipalities to address this infrastructure are “substantial, potentially exceeding $400 billion over the next 20 years, roughly twice the current level of investment by all levels of government.” The Report states that P3s can accelerate water infrastructure project delivery compared to publicly financed projects and have the potential to augment traditional water system financing methods such as tax exempt municipal bonds and State Revolving Funds.
The Report notes that private sector capital is a potential source of financing for water and wastewater infrastructure and points out that while historically rare, there are examples of municipally owned utilities entering into agreements with private companies to manage their water systems. Two recent examples cited in the Report are Rialto, California, which in 2012 signed a 30-year agreement with a private water services contractor to oversee a $41 million investment in capital improvements to Rialto’s water system while the city retains asset ownership, and Bayonne, New Jersey, whose municipal utility signed, also in 2012, a 40-year agreement with an investment firm in which the utility retains ownership of assets and responsibility for setting rates, while the private entity operates the system, invests $107 million, and retires $130 million of debt.
The Panel called for the U.S. Army Corps of Engineers and the Environmental Protection Agency to work with the Departments of Transportation and Treasury as they implement the Water Infrastructure Finance and Innovation Act program authorized in the Water Resources Reform and Development Act of 2014, and encouraged the DOT and other agencies to share lessons learned regarding innovative financing programs with the Corps of Engineers and EPA as they implement this new credit program.
The Transportation and Infrastructure Committee will use the Panel’s recommendations as a resource when considering future legislation.
To read the Panel’s full report and recommendations, click here.