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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.
- Public-Private Partnerships for Transportation: Categorization and Analysis of State Statutes— In-depth report produced by the National Conference of State Legislators. NCSL categorized and compiled the provisions of state law addressing public-private partnerships (P3s) for transportation.
- P3 Congressional Caucus Summary – November 19, 2013
- The Role of Private Investment in Meeting U.S. Transportation Infrastructure Needs : A landmark ARTBA study that: 1) reports on how transportation P3s have been utilized for more than 20 years and what impact P3 projects have had toward meeting U.S. transportation capital infrastructure needs; and 2) realistically assesses the P3 process in the U.S., including the political, procedural and financial constraints/opportunities for transportation investment.
OVERVIEW OF PUBLIC-PRIVATE PARTNERSHIPS (P3s)
- 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%.
FEDERAL ROLE IN SUPPORTING P3 PROJECTS
- 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).