Public-private partnerships in the US: The state of the market and the road ahead

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A growing market for public-private partnerships in the US

The market for public-private partnerships (P3s, also known as PPPs) in the US is gaining ground. Investors are interested, capital is plentiful, and the federal government is increasingly involved.

Recent administrations – Republican and Democratic – have overseen legislation and programs that supported P3s. This support will likely continue given ongoing fiscal constraints and the increasing need to repair and expand the country’s infrastructure.

Already, more projects are entering the pipeline and reaching financial close. And it’s noteworthy that these projects are spreading to new sectors and states.


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P3s are more than just toll roads

Other kinds of P3s are becoming more and more common.

Schools and universities

The number of public universities interested in P3s is growing. Montclair State University in New Jersey began the trend with a P3 for housing facilities in 2011. Since then, universities in Georgia, Kentucky and Indiana have done similar deals. In 2016, the University of California at Merced closed with the Plenary Group on a $1 billion P3 to build campus facilities. Source: InfraAmericas and PwC

Government buildings

P3-sponsored government building projects are on the rise. Seth Miller Gabriel, director of the Office of Public-Private Partnerships for the District of Columbia, says government buildings, including schools, are the main areas in which his city is looking at P3s. Also, the city of Long Beach, California closed on a $530 million P3 to build a new civic center in 2016. Source: InfraAmericas and PwC

Waste and water projects

Congress passed the Water Infrastructure Finance and Innovation Act (WIFIA) at the end of 2014, realizing the potential for federal credit assistance for water infrastructure P3s. Miami-Dade County in Florida is moving ahead with its P3 program for a number of waste and water projects, and we expect more to enter the pipeline. Source: InfraAmericas and PwC

Other infrastructure

For example, Kentucky closed in 2015 a $275 million P3 to build a 3,000-mile statewide broadband network. The Ohio State University is using a P3 to upgrade its energy system. And Purdue University and the city of West Lafayette closed with the Plenary Group in 2016 on a P3 to turn State Street into a pedestrian-friendly urban hub. Source: InfraAmericas and PwC

The federal government supports P3

Recent administrations – Republican and Democratic – have overseen legislation and programs that support Public-Private Partnerships.

In 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST) with an overwhelming bipartisan majority.

The Department of Transportation unveiled also in 2015 the Build America Transportation Investment Center (BATIC) to helping P3s access federal credit and navigate federal permitting and procedural requirements.

And the potential for Federal credit assistance for water infrastructure P3s was realized at the end of 2014 when Congress passed the Water Infrastructure Finance and Innovation Act (WIFIA).

Given the ongoing need for infrastructure and fiscal constraints, we expect the government will likely continue to support P3 programs.

P3s are not just about financing

It is important to make sure that a project really makes sense as a public-private partnership. The bar is high in the US where, thanks to the tax-exempt bond market, most cities and states can raise money inexpensively. So, it is not enough to propose using a P3 merely as a financing mechanism.

Instead, there should be a detailed analysis of how a P3 can potentially generate both financial and non-financial benefits. This analysis should also look at how P3s can potentially generate cost and schedule efficiencies (otherwise unattainable by the government alone) by including multiple project elements—such as design, construction, maintenance, and operations—in a single contract. The analysis should also include how the P3 will manage the infrastructure asset throughout its lifecycle.

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Rob McCeney

Rob McCeney

Partner, Energy & Infrastructure Deals, PwC US

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