Will Trump Use P3 to Help Infrastructure Take Off?

Change Agent: Paul Soglin, Mayor of Madison, Wis.

During his campaign, President Trump promised to plow $1 trillion into our crumbling infrastructure to bring it to first world standards.

On Jan. 30, he will outline the Administration’s plan during his first State Of The Union address. And it could include a role for public-private partnerships (P3s). 

Funding from the private sector will be a key part of the Trump infrastructure plan, said Kent Rowey, Partner at global law firm Allen and Overy, who’s familiar with such deals for infrastructure projects.

“The messaging from the President has been inconsistent on the use of P3, but the senior appointees in the administration, especially in the Treasury and Transportation Departments, have been more bullish about using federal funding and programs as a ‘force multiplier’ for private investment in infrastructure through P3s,” Rowey told Icons of Infrastructure.

Rowey is confident that P3s will be key elements in a 2018 infrastructure bill.  

“With concerns over increased budget deficits in light of significant tax cuts, government policy will need to encourage private investment rather than just massive government funding grants. In other words, the federal government cannot afford to pay for all the infrastructure funding needs of the country.”

Top 10 notable P3 Projects in the US

Ahead of the address, the Axios site released a leaked copy of his plan. The White House has not confirmed the authenticity of the six-page document.

“Whether its conventional funding for roads or public transportation, we are falling dangerously behind – from a safety standpoint and an economic standpoint,” the mayor reiterates.

The leaked plan calls for the use of federal grants and with private investment, to kick-start new projects across the nation. The document also details development of rural infrastructure, especially in areas of transportation, broadband, water and sewer systems.

In particular, the draft spells out a funding principle, which should be music to many ears, especially smaller cities starved for infrastructure investment dollars to fix their crumbling roads and highways.

  • Eliminate constraints on use of public-private and public-public partnerships (P3) in transit

The leaked plan asks local communities to arrange for the majority of project funding on their own, which could prompt more P3 deals.

Trump Leaked Plan and Cities

Trump Leaked Plan and the Power Sector

P3s have been gaining traction in recent years; it’s a turnkey model whereby private companies partner with local governments to finance, construct, manage, and share the risk of public projects. The private companies are repaid in various ways, including by income generated through highway tolls or airport fees or bonds issued by local governments.

Many cities already are using the P3 model to build projects.

For example, Denver recently turned to P3 for a $1.8 billion, 34-year deal that calls for big security changes and management of new concessions at its airport. Spain-based Ferrovial Airports will lead the P3 consortium called Great Hall Partners. The other main players on the Great Hall Partners team are Centennial, Colo.,-based Saunders Construction, which would oversee the renovation work, and equity partner JLC Infrastructure, an investment fund started by former NBA star Magic Johnson and Loop Capital based in Chicago.

New York City’s $4 billion renovation of LaGuardia Airport’s Terminal B is being financed, designed, built, and will be managed by a P3 led by Skanska USA. JLC Infrastructure and Loop Capital have invested in this project as well.

However, some elected officials s are not happy with Trump’s proposed plans as detailed in the leaked  copy, skeptical that Congress will actually pass those measures in a bill.

“Denver and Colorado have real needs to fund transit for a growing population to relieve congestion, road repair to keep up with our harsh mountain climate, and countless other investments to keep water safe and accessible,” said Denver Councilwoman Robin Kniech, who had voted for the airport P3.

“This (leaked plan) fails to deliver real new resources, and its criteria for local communities to carry 80% of the burden will recklessly eliminate many of the communities with the most economic need for investment.

I don’t believe cities or rural areas will be duped into supporting this, and I hope Congress won’t either.”

Author’s note: Mike Keating contributed to this report.

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