The initials “PPP” stand for public-private partnerships in the world of infrastructure financing. A recent roundtable discussion sponsored by the Commonwealth Foundation in Harrisburg, PA, demonstrated that “PPP” can also stand for “profit, profit, profit.”
Pennsylvania state Rep. Richard Geist, R-Altoona, and four panelists from the private sector touted the “pro” side of PPPs without delving too much into the “cons.”
Click here to view the roundtable, which was moderated by Commonwealth Foundation President Matthew Brouillette and archived on Geist’s Web site. The Commonwealth Foundation is a conservative economics think tank in Harrisburg.
Roundtable panelists included Robert Prieto, senior vice president of Fluor Corp.; Brian F. Chase, vice president of Carlyle Group’s global infrastructure buyout division; Karen Hedlund from the Nossaman, Gunther, Knox and Elliott law firm; and Andy Garbutt of KPMG Corporate Finance.
Chase discussed how PPPs make profit through management fees and returns that are realized after shareholders are paid.
Chase said Carlyle Group recently established a $1 billion fund to invest in U.S. infrastructure, similar to what some overseas groups have done.
Chase said 72 companies have created infrastructure funds during the past few years, potentially bringing $600 billion to the table, including borrowing power, to invest in infrastructure.
Prieto spoke of the need for states to keep an open mind to “unsolicited proposals” from private investors.
“We’re only going to come in with a project we think we can make some money on,” Prieto said.
The private sector’s willingness to take the risk can lead to profit, panelists agreed.
States like Pennsylvania are in need of private investment, Geist told the other panelists. He referred to key transportation projects as “heavy movers.”
“We have in Pennsylvania a huge backlog of heavy movers, and I mean that move a lot of projects that are not going to be built out,” Geist stated.
Observers of the webcast event included Mike Joyce, senior government affairs representative for the Owner-Operator Independent Drivers Association. He said the “pro-PPP” discussion avoided tackling the challenges that private control of infrastructure present.
“The Commonwealth Foundation has a libertarian view like the Reason Foundation that believes we should turn everything over to the private sector,” Joyce told Land Line.
“What comes out of this roundtable is that they are here to make some money, here to make profit on this.”
Joyce said there are lawmakers in Pennsylvania that are against PPPs, but they are often overshadowed by Geist, who is the ranking Republican on the state’s House Transportation Committee.
“That wasn’t a hearing. That was for Rick Geist to look good about public-private partnerships,” Joyce said.
The panelists often referred to PPPs as a tool in the tool box for states to improve infrastructure. Panelists also frequently stated that PPPs were not a panacea to solve all of a state’s problems.
Joyce says there needs to be balance in the discussion, something that was missing at the Commonwealth Foundation roundtable.
“I’m so tired of the ‘tool in the tool box’ analogy,” Joyce said.
– By David Tanner, staff writer