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IBTTA’s Jones Helps Drive S&P Discussion on P3s for Infrastructure

Bill Cramer

When it was time to dig into the pros and cons of public-private partnerships (P3s) to pay for President Trump’s proposed ambitious infrastructure plan, IBTTA Executive Director and CEO Patrick Jones was one of the experts S&P Global Market Intelligence sought out for comment.

In an era of easily accessible news and commentary, S&P is more than an average source. “Every day,” its website states, we collect, scrub, interpret, and analyze vast volumes of content, turning it into actionable intelligence on the global financial markets and the companies and industries that comprise those markets.” The ultimate objective: to “deliver the data and insight you need to make informed, smarter business decisions and investment decisions that are critical to your future.”

Which turns out to be exactly the right starting point for Jones’ insights on the use of P3s to clear the multi-trillion-dollar funding gap facing U.S. infrastructure.

"Financing is not going to solve the problem," he told S&P. "What we need is funding. We need more money coming into the system to pay for all the operations and maintenance and capital needs that we have."

More Money than the Federal Budget

S&P touches on the common objection—actually, the inevitable reality—that the public pays the cost of a P3, sooner or later. (Pop quiz: Name the global association that popularized the phrase: There Are No Free Roads.) The article brings home the reality that it’s all about cash flow, and assembling enough of it to meet a pressing public need.

“The U.S. needs more money than the entire federal budget to bring its roads, bridges, airports, and other infrastructure into the 21st century,” S&P notes. The country’s infrastructure received an average grade of D+ in the latest in a quadrennial series of report cards issued by the American Society of Civil Engineers. And “the country's airports, roads, dams, water, and electrical systems would need no less than $4.6 trillion of repairs and upgrades to bring them to a state it considers adequate.”

That makes P3s an enabler for an infrastructure program that moves quickly enough, and widely enough, to make a dent in the backlog. For surface transportation, tolling is the essential tool that will generate the steady revenue to bring private investors to the table.

In his S&P interview, Jones acknowledged that not all P3s have succeeded in the past, but he said U.S. cities and states had learned from the experience. “He held up Virginia's deals with Australian toll road developer and manager, Transurban, as successful road projects that delivered value to both the public and to investors,” writes correspondent Tom Yeatts.

Time to Think Big About P3s

The article goes through the pros and cons of P3s before concluding with comments from Fraser Hughes, CEO of the Global Listed Infrastructure Organisation, a Brussels-based association that formed last July.

“You've got assets sitting on the balance sheets of municipalities or the government that are not being utilized properly, that aren't run properly,” he told S&P. “And there are huge amounts of underlying value that you can put into the market by getting these things either run by a … listed company or by a private company.”

He noted that real estate investment trusts are already a $2-trillion global industry, and suggested a similar model might deliver the same results for infrastructure that REITs made possible for commercial buildings.

“You've got to think these things through really long term. You're going to need to maintain, and you're going to need to develop infrastructure, not only in the U.S., but around the world,” he said. “We believe infrastructure investment trusts may be very helpful in attracting investment in to meet those longer-term demands.”

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