In the last issue, I mentioned one of the more interesting sessions at this year’s APTA Annual Meeting was the private sector financing session in which investors, lenders and private project sponsors described what they look for in projects to get involved. As I said, it was clear U.S. public transportation lags behind other countries and even other U.S. industry sectors. What was also clear, though, is that current federal government policy is doing nothing to play catch-up, despite the fact that now more than ever, we need to close the gap with the rest of the world.
Key ingredient missing: certainty
It was clear from this session and comments of others engaged in public-private partnerships (P3s), the best deals are those where the roles and responsibilities as well as sources of payments in the contracts are clearly defined and predictable. Those that are less so result in more risk each side may have to take on. And for the private sector companies involved in these contracts, higher or unclear risk almost always means a higher price to cover the greater perceived risk.
For both a Congress and an Administration that agree they should encourage more private sector investment in infrastructure development, they almost could not undermine this goal any more if they tried. Thanks to the shutdown, uncertainty about future solvency of the Highway Trust Fund and Mass Transit Account, and general uncertainty about the next appropriations and authorization bills, there is little wonder why there is as much talk about P3s as there is.
Plenty of evidence suggests P3s and other ways to attract private capital can expand infrastructure investment. Denver’s Eagle P3 Commuter Rail Project and the various state infrastructure banks are examples of this proven success. Bills have already been written and introduced to make this happen — but Congress needs to act for a change.
End the gridlock
One way to start is for both sides on Capitol Hill to agree to end the gridlock and pass a budget for the rest of this fiscal year and next, before the government shuts down again. If they agree to a number, even one only for transportation, then it will become clear they will have to find tax revenues to fund that number, because the Trust Fund is broke. If the genie comes out of the tax bottle, then passing policies to attract private financing become doable.
Trillions of dollars are sitting on the sidelines, or in accounts overseas, looking for an investment climate with some certainty in it. One of those investments could be public transportation, with hundreds of thousands of jobs created as a result, if our elected officials would only do their jobs.