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What's New: Public-Private Partnerships (P3s)

House to Study Greater Use of P3s

Thursday, January 23, 2014  

The House Committee on Transportation and Infrastructure recently formed a panel to examine the use of P3s across all modes of transportation, economic development, public buildings, water and maritime infrastructure and equipment. The panel will conduct a series of roundtable discussions with industry groups and leaders of state and local government to determine how the private sector can increase infrastructure investment in the U.S. The panel is charged to explore three primary issues: 1) the role that P3s currently play in the delivery of transportation and infrastructure projects in the U.S; 2) whether P3s enhance the delivery and management of such projects beyond the capability of government agencies or the private sector acting independently; and 3) how to balance the needs of the public and private sectors in implementing P3s. The panel has no legislative jurisdiction, but likely will issue a report to the Transportation Committee at the end of its six-month tenure, which begins on February 11, with the panel’s first roundtable session. A copy of the charge to the panel is attached, which includes a list of panel members.

The P3 panel was formed just as the House Transportation Committee kicked off the process of drafting a new surface transportation bill to replace the current law, which expires on September 30. In the last reauthorization two years ago, Congress expanded the lending authority of the Transportation Infrastructure Finance and Innovation Act (TIFIA). TIFIA uses federal funding to leverage state and local funding and private investment in providing secured loans, loan guarantees and letters of credit to get transportation projects completed. The federal government can provide better interest rates and longer repayment times than would otherwise be available to state and local construction projects being funded on a pay as you go basis from revenue streams that are uncertain.

The U.S Department of Transportation (DOT) used its expanded authority to create the intended surge in low-interest long term loans to fund transportation projects in the last 15 months. The DOT has been announcing such loans piecemeal as they were finalized, but the recent $1.6 billion TIFIA loan to help pay for the Tappan Zee bridge in New York drew attention to the impact of the changes made in the last surface transportation reauthorization legislation. TIFIA generally is seen in Congress as a successful way to get needed infrastructure improvements, over and above what the Highway Trust Fund and federal and state budgets can fund. TIFIA has bipartisan support in Congress. The upcoming reauthorization provides an opportunity to tweak provisions in TIFIA, if needed, to assure that any public construction projects that TIFIA backs are bonded.

While the Chairman intends to pass surface transportation reauthorization legislation before the current law expires, it is too early to speculate on whether that is possible. 

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