Perpetually Stalled on P3s

One P3-stymied state is Pennsylvania, which aborted a 2006 attempt to lease the Pennsylvania Turnpike in the face of legislative opposition. A subsequent plan to lease part of I-80 to the turnpike authority was likewise dropped when motorists objected to new tolls. P3-enabling legislation has repeatedly failed to pass.

State Transportation Secretary Barry J. Schoch says that while any potential effect on the state's prevailing wage law is "not a deal breaker," there's little the state could do with P3s right away because "a state needs to be able to contribute money for a P3 project. Right now, we have none to spare."

Anxious for growth and to propel some politically expedient projects, New York bucked the odds and passed a design-build law in December after years of opposition. Some observers speculate whether P3 enabling is next, as Gov. Andrew Cuomo (D) and other politicians seek to escalate New York City projects such as the overhaul of the Goethals Bridge and replacement of the Tappan Zee, both aging spans across New York waterways.

William G. Reinhardt, editor of P3 sector newsletter Public Works Financing (PWF), says Cuomo has "emphatically ruled out" privatized approaches on the $5.2-billion Tappan Zee project, but "there's a belief among some advisers that P3 may be the only option" to finance and deliver it. He says the span's revenue certainty would attract long-term institutional investors but noted the cost and complexity of P3 procurement may challenge getting the project to groundbreaking before the Democratic National Convention in September.

But Perrin sees a "hopeful sign" in a Congressional Budget Office report issued this month that says P3 approaches "have built highways slightly less expensively and slightly more quickly" than traditional methods; also, she says, it seems Congress agrees that Transportation Infrastructure Finance and Innovation Act funding should be expanded to $1 billion a year from about $122 million now. "It has been the make-or-break source of financing for virtually every P3 project successfully brought to market since its authorization" about 20 years ago, said Fred Kessler, partner at P3 consultant Nossaman LP in a recent PWF article.