Dive Brief:
- According to a Moody's Investors Service report, the U.S. market for public-private partnerships (P3s) is ripe for growth and could become one of the world's biggest.
- The use of P3s has been sporadic thus far, but Moody's found that important factors like available government resources, political support, a strong capital market and the legal structure necessary to enforce P3s will continue to benefit that delivery model.
- The availability-payment P3 had a record 2015, with four states — Kentucky, Ohio, Pennsylvania and Michigan — using that payment mechanism for the first time. However, Moody's noted that the progress of P3s is such that each P3 project completed is often the first in its area.
Dive Insight:
The report added that some provisions of the federal Fixing America's Surface Transportation (FAST) Act hold positives and negatives for the future of P3s. On the plus side, is the Build America Transportation Investment Center (BATIC), which provides an information and coordination clearinghouse for states and other entities involved in federal transportation projects. On the negative side, the FAST act also cut 70% of funding to the Transportation Infrastructure Finance and Innovation Act (TIFIA); however, the hope is that it will not affect upcoming projects since TIFIA is allowed to keep unpledged funds.
Several large projects have recently been announced as P3s, such as the $3.3 billion, 16.2-mile Purple Line light rail project in Maryland. The project was awarded to Fluor Enterprises-led Purple Line Transit Partners and construction will begin later this year. The joint venture will design-build, finance, operate and maintain the rail for the state.
Illinois is also jumping into the public-private pool with its first ever P3 managed lane project. State officials say the P3 structure will save the state as much as $435 million in construction costs. And in another large P3 award, Skanska recently signed a $94 million contract for the second phase of the $173 million Irving Music Factory, a mixed-use office and entertainment complex, with the city of Irving, TX.
