The Trump infrastructure plan has landed. It could transform the infrastructure sector in the US in four main ways, but key questions remain. We look at the most important takeaways, what we still need to know, and the implications for stakeholders.
Even though investor capital is abundant at the moment, states and cities need to hurry if they want a slice of the infrastructure pie. Based on PwC's experience, we have come up with six guidelines to help states and cities win the interest of both private investors and federal policymakers:
States and cities that follow these guidelines can better compete for the financing they need to drive critical capital projects forward—and deliver them on time and on budget.
“The federal government should consider doing more than just proposing incentives for “shovel ready” projects . . . we need a well-designed and integrated capital plan that selects projects according to a comprehensive, repeatable process that reduces politicization and focuses on the greatest long-term value for each dollar."
President Trump has floated the idea of potentially supporting private financethrough tax reform legislation. While generous tax incentives may attract more investors, they may also produce unwelcome consequences for US deal flow. For example, investors may end up chasing tax advantages instead of evaluating projects based on predictable returns and long-term value.
In our view, any tax incentive must be carefully crafted to take into account the demand and supply equation that governs deal flow. The graphic on the left illustrates five ways incentives can be structured to attract investors and expand the project pipeline.
Many of the urban infrastructure assets are operated by one of the 3,141 counties in the US. Most states (with the exception of Virginia) don’t have a centralized infrastructure pipeline to track what’s going on in the counties, however. As a result, investors often can’t find sufficient data to judge if a project is ready and how well it aligns with investment mandates.
There is a misconception that the private sector is interested only in traditional infrastructure projects like toll roads, where they can collect revenue upon completion. But that may be an outdated notion. With new innovative approaches to allocating risks and project scope, even infrastructure projects without a traditional revenue stream, such as streetlights, have proven attractive to investors. In fact, in recent years, we have seen a growing number of US P3 infrastructure projects in non-traditional areas including:
In our work with governments, investors, multi-lateral development banks, and architectural, engineering and construction firms, our capital projects and infrastructure team assists public and private sector clients through the entire project lifecycle – from strategic planning to finance and delivery – of large-scale capital projects and portfolios. See how we can help you navigate the challenges and opportunities of this rapidly-evolving US infrastructure industry. Explore below.