Panel urges transparency, caution for public-private partnerships

By David Tanner, Land Line senior editor | 9/17/2014

Public-private partnerships are neither a silver bullet nor a free lunch, a U.S. House panel has concluded in a final report to the Transportation and Infrastructure Committee.

The House Panel on Public-Private Partnerships published its report on Wednesday, Sept. 17, urging transparency and accountability to the public whenever a PPP, also known as a P3, is being considered.

A public-private partnership is a financial agreement between government and the private sector involving a project or investment. For roadways and bridges, a PPP can involve construction, operation and/or maintenance by a private company in exchange for a cut of the finances. Many times, a PPP for a roadway or bridge involves tolls as the pay-for mechanism.

The House Transportation and Infrastructure Committee formed the PPP panel in January, asking for recommendations for balancing the need to generate more cash for infrastructure while protecting the public interest.

Panelists, led by U.S. Rep. John J. Duncan, R-Tenn., said PPPs can provide needed funding but should be used with caution.

“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,” Duncan said in a statement.

“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,” Duncan said.

The report also acknowledges and celebrates a strong federal role in transportation infrastructure.

“One consistent theme throughout the panel’s work was that P3s are not a source of funding and should not be thought of as the solution to overall infrastructure funding challenges,” the report authors state.

“Adequate federal investment in transportation and infrastructure is a necessary precondition to modernize our nation’s highways, bridges, rail and transit systems, airports, ports, waterways, and public buildings – regardless of whether individual projects are carried out as P3s or not.”

OOIDA is against certain types of P3 projects but not all. The Association is against the lease or sale of public roadways to the private sector and is against the conversion of federally funded highways and bridges into toll roads.

“We appreciate the panel doing an in-depth examination of all sides and all aspects of public-private partnerships in infrastructure,” OOIDA Director of Government Affairs Ryan Bowley said.

“We especially appreciate their strong bipartisan comments on the importance of transparency and ensuring that the public is made aware of information regarding details of potential PPPs before they are finalized.”

Bowley said many states are facing significant infrastructure needs but there is also reluctance on the part of elected officials to increase fuel taxes or take other measures.

“Some have offered up P3s as the only solution for every transportation funding need out there, but past experience has shown that when transparency has not been a priority, bad deals have gone through that have had a negative impact on truckers and other motorists,” he said.

Bowley points to the Indiana Toll Road, which has seen truck tolls increase 176 percent since the state government leased the roadway to private investors in 2006.

At the time the deal was being negotiated, the details and consequences of the lease were not widely understood by the public or state officials, Bowley said.

“Most state DOTs are engineers, not Wall Street gurus, yet the private side has that as an advantage,” Bowley said.

“As states get into discussions about P3s, they’ve got to make sure they’ve got the capacity to do this,” he adds. “Any situation in which you have public dollars going to a private entity, the default should always fall to transparency and greater public engagement instead of where it’s been historically.”

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