Overview of P3 & Financing Approaches

According to the Federal Highway Administration, public-private partnerships (P3s) are defined as “contractual agreements formed between a public agency and a private sector entity that allow for greater private sector participation in the delivery and financing of transportation projects.” Public-private partnerships have become a useful tool in helping cash-strapped states meet the public’s growing transportation needs, and the P3 approach to highway construction is a potential financing mechanism for governments and private firms to consider.  This section will provide an overview of the advantages and challenges of P3 projects, a sample of P3 state statutes, and a summary of proposed public-private partnership legislation at the federal and state level.



  • 36 states and Puerto Rico have enabling legislation to authorize public-private partnerships.
  • P3s are an option in the transportation financing tool box, and they are a supplement to other funding options in paying for construction projects, and not necessarily a replacement.
  • P3s have a role to play in delivering infrastructure improvements, where possible.
  • Since 2008, the P3 market share has remained around 2%.


  • Private Activity Bonds (PABs).  These tax-exempt bonds are one of the main ways that the U.S. Department of Transportation helps to support P3 projects throughout the nation.
  • “Transportation Infrastructure Finance & Innovation Act” (TIFIA) Program Loans.  This credit assistance program provides loans, loan guarantees, and letters of credit to projects that exceed $50 million and have revenue sources to repay the funds.
  • P3 Agreements in Section 1534(d) of Moving Ahead for Progress in the 21st Century (MAP-21).
  • New Congressional Caucus on Public-Private Partnerships (P3s).