The federal government is promoting collaboration and public-private partnerships in a very big way! As a result, significant changes are occurring.
Photo by DonkeyHotey licensed under CC BY 2.0.
A perfect example of a changing world is the existence of 23 federal agencies that now have offices dedicated specifically to pursuing collaborations with private-sector partners. Would anyone have believed a couple of years ago that the State Department or the Veterans Administration would be soliciting public-private partnerships (P3s)? Probably not – but both agencies have recently launched visionary initiatives.
Even President Obama’s administration is supporting collaboration. His recently proposed 2017 federal budget contains a reformation of the Private Activity Bond (PAB) program and a newly-conceived program for Qualified Public Infrastructure Bonds (QPIBs). The latter promises to eliminate restrictive red tape that has slowed down critical projects in the past.
PABs offer a low-cost option for financing investment in infrastructure projects. When used, there is a mandate that at least 10 percent of bond proceeds go to private investment. The newer QPIBs have many of the same features, but they also offer exemption from the Alternative Minimum Tax which makes them even more attractive. These bonds are to be used for water and wastewater infrastructure projects.
Another relatively new funding source is a result of the Water Infrastructure Finance and Innovation Act (WIFIA). This program was created specifically to fund P3s for water infrastructure projects. Although the bill was signed into law nearly two years ago, its positive effects are just now beginning to be seen.
In the transportation sector, the Transportation Infrastructure Finance and Innovation Act (TIFIA), which was once a major funding source, was cut when the latest transportation bill was signed. In fact, 70 percent of the TIFIA funding was eliminated, dropping the allocation from $1 billion for fiscal year 2015 to an average of $287 million per year.
To compensate for this, an alternative for transportation-related P3 funding appears in Obama’s proposed budget. It’s a program called Financing America’s Infrastructure Renewal (FAIR). Whether it can survive the budget fight is unclear, but if it does, it will provide loans directly to infrastructure projects utilizing public-private partnerships.
At a time when the country’s economy is fragile because of world unrest, China’s slowing economy and the decline of oil prices, the new government contracting opportunities that could result from collaborative efforts between public and private partners offer a great deal of hope for the country. What better options exist for the creation of new jobs, economic vitality and maintaining the nation’s most competitive assets – its infrastructure?
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