Reed - NCPPP

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Transcript Reed - NCPPP

Overview and Principles for
Implementing State PPP (P3)
Presented at the NCPPP P3 Connect
Denver, Colorado Conference
By Jim Reed, Group Director –
Environment, Energy and Transportation
National Conference of State
Legislatures (NCSL)
July 29, 2014
Government Funding Shortfalls
Great Recession aftermath, slow growth
Climbing out of State budget shortfalls since 2008
Political reluctance to raise new taxes
Previous underinvestment in infrastructure
Aging infrastructure in all sectors
Continuing uncertainty of federal funding and
program, less federal funding going forward, i.e.
• Transportation: Declining gas tax revenues (less
driving, electric and hybrid vehicles, millennial’s
drive less)
The P3 Option
• Public-Private Partnerships are attractive because they:
• Can complete projects that cannot be fully funded
through traditional means.
• Expand the pool of available money for transportation
projects- private equity.
• Can create cost savings in terms of lower initial project
cost to the public, quicker project completion and longterm operation & maintenance
• Private sector takes on a portion of the financing risk
and other risks.
• Bring private sector practices and innovations into
public projects, which can increase efficiency.
Two Key Legislative Factors That Assist
States in Developing P3s
• Robust and Comprehensive PPP Enabling
Legislation: Sets up the institutional
framework within which PPPs can occur
– “PPP enabling laws are important in facilitating private
investment in infrastructure. Better designed PPP
enabling laws can serve to attract more private
investment into a state.”
(Geddes and Wagner ,Cornell Univ. study using linear
probability models to examine P3 laws - August 2012)
• Creating enhanced public sector expertise by
establishing a specialized P3 office
33 States with Transportation PPP Enabling
Legislation + Puerto Rico
Key Elements: PPP Enabling Legislation
• Gives broad authority for a variety of P3 projects
• Creates a robust framework for contracting
– Flexibility in application of state procurement laws
• Defines allocation of risks between public sector
and private partners
• Allows combination of private and public money
in financing, also allows revenue sharing
• Allows availability payments
• Political approval at an appropriate (early) stage
• Creates specialty P3 office to handle projects
Closing the Expertise Gap:
State PPP Offices
• Arizona Office of P3 Initiatives (DOT)
• California Public Infrastructure Advisory Commission (BTH)
• Colorado High Performance Transportation Enterprise (DOT)
(Government-owned business)
• Georgia P3 Program (DOT)
• Michigan Office for PPPs (Treasury Dept)
• Ohio Division of Innovative Delivery (DOT)
• Oregon Office of Innovative Partnerships and Alt. Funding (DOT)
• Puerto Rico Public-Private Partnerships Authority
• Texas Best Practices Center (under development)
• Washington Transportation Partnerships Office (DOT)
• Virginia Office of Transportation PPPs (DOT)
• Proposed Federal Center of Innovative Transportation Finance
NCSL PPP Principles
• Principle 1: Be informed.
Decision makers need access to fact-based information that
supports sound decisions.
• Principle 2: Separate the debates.
Debates about the PPP approach should be conceptually
distinct from issues such as tolling, taxes or specific deals.
• Principle 3: Consider the public interest for
all stakeholders.
Legislators should consider how to protect the public
interest throughout the PPP process.
NCSL PPP Principles
• Principle 4: Involve and educate stakeholders.
Stakeholder involvement –early and often--helps protect the public
interest, improve buy-in and mitigate political risk.
• Principle 5: Take a long-term perspective because
P3s are long-term.
Legislators should approach PPP decisions with the long-term
impacts in mind, looking beyond short-term considerations
• Principle 6: Let the transportation program drive
PPP projects—not the other way around.
PPPs should be pursued to support a state’s transportation strategy,
not just to raise short-term revenue.
NCSL PPP Principles
• Principle 7: Support comprehensive project
Before pursuing a PPP, it should be shown to be a better
option than traditional project delivery.
• Principle 8: Be clear and transparent about
the financial issues.
States must carefully assess financial goals, an asset’s value
and how to spend any proceeds.
• Principle 9: Set good ground rules for bidding
and negotiations.
Legislation should promote fairness, clarity and transparency
in the procurement process.
NCSL Contact Information
Jim Reed
Group Director – Environment, Energy and
Denver, Colorado
(303) 856-1510
[email protected]