Public-Private Partnerships Are Key to Turning the Corner on Infrastructure

Public-private partnerships have provided ways for many communities around the country to upgrade their infrastructure. Over $36 billion in transportation-related public-private partnership projects alone have been undertaken in the U.S. in the last decade, often saving taxpayers in the neighborhood of 20%.

With our nation’s infrastructure aging, the need for improvements continues to grow. President Joe Biden has made upgrading the nation’s infrastructure  a chief goal of his administration. And long before the pandemic, the American Society of Civil Engineers estimated that by 2025, a total investment of $4.59 trillion would be needed to improve the nation’s roads, bridges, buildings, etc.

As state and local governments face fiscal challenges in the wake of the pandemic, meeting those demands is more difficult.  But those issues could prompt the private sector to see opportunities and find ways to work with state and local officials in a public-private partnership — an agreement between a private company and public body that allows for the public sector to transfer certain risks and responsibilities to the private sector.

Many communities’ infrastructure needs include public safety facilities, healthcare facilities, courthouses, and parks. The image and business potential of those communities are undermined when those places aren’t upgraded. The ability to make needed improvements results in a better quality of life and increased revenues for the public agency.

Public-private partnerships offer a unique opportunity to redevelop and revitalize smaller and disenfranchised communities around the country. And when structured properly, they can provide an opportunity for those communities to develop new facilities and infrastructure, which can be a catalyst for community development.

Large urban communities have received most of the attention in recent years for the benefits brought when businesses and local governments work together, but many smaller communities also have pressing infrastructure needs, and private involvement can make the difference. Let’s take a look at three vital infrastructure areas in which public-private partnerships can make a big impact on communities:

• Communication. Improved access to broadband, for example, has a major impact on the lives of those it reaches, increasing business opportunities, job growth, and inclusion of people once cut off from economic growth. New mobile technology has filled gaps in communities, and as broadband requires large capital investments, public-private partnerships are well-positioned to manage complex interfaces while also balancing the financial commitment.

• Mobility. Some states’ budgetary shortfalls have made aging infrastructure a lingering problem. States that are making headway have turned to innovative approaches such as public-private partnerships. It allows for private sector participation, which is welcome given the rising costs of materials and services. Transportation is one aspect where the public-private approach is often used as a way to design, build, and finance infrastructure such as roads, bridges, transit systems, and toll facilities.
• New facilities. Smaller or disenfranchised communities typically do not have the technical resources and expertise to deliver capital projects efficiently, and that’s a reason many of those areas have not constructed new facilities in decades. A well-structured partnership shifts risk from the public sector to the private sector while allowing the construction activity to be executed by local contractors, subcontractors, and vendors. When the construction dollars stay within a local community, those dollars can turn over six to seven times, creating a significant impact on the bottom line for the community.

Increasingly, more states have had to get innovative to solve their infrastructure issues. Public-private partnerships are powerful and produce benefits for all involved. These are relationships combining resources and knowledge that can profoundly enhance underserved communities.