U.S. Public Private Partnerships: Prospect for the Future

Transcription

1 U.S. Public Private Partnerships: Prospect for the Future Interna9onal Transport Forum Leipzig, Germany May 22, 2013 Jonathan L. Gifford, Ph.D. George Mason University School of Public Policy Arlington, Virginia USA /

2 Outline Background on U.S. Transporta9on Finance U.S. transporta9on finance Limita9on of tradi9onal approaches U.S. P3 Policy U.S. Government ini9a9ves U.S. state ini9a9ves P3 Project Case Studies I495 Capital Beltway Express Lanes (Virginia) South Bay Expressway (California) SR895 Pocahontas Parkway (Virginia) George Mason University P3 Policy Program 2

3 Background: U.S. Transporta9on Finance OECD na9ons investment in infrastructure sectors, as % of total fixed investment ( ) Transport and Communications Energy and water Organisa9on for Economic Coopera9on and Development. (2009). Economic Policy Reforms 2009: Going for Growth. Paris. Retrieved from hdp:// public.eblib.com/eblpublic/publicview.do?p9id=

4 Background: U.S. Transporta9on Finance Transport and communica9ons investment as a percentage of GDP, OECD na9ons Organisa9on for Economic Coopera9on and Development. (2009). Economic Policy Reforms 2009: Going for Growth. Paris. Retrieved from hdp://public.eblib.com/eblpublic/ PublicView.do?p9ID=

5 Background: U.S. Transporta9on Finance Investment in inland transport infrastructure (% GDP, ) Interna9onal Transport Forum. (2011, July). Trends in transport infrastructure investment Sta<s<cs Brief: Infrastructure Investment. 5

6 U.S. Transporta9on Spending by Level of Government 6

7 Background: Issues with Tradi9onal Transporta9on Funding U.S. Federal Highway Trust Fund: Principal source of federal highway /transit funding since 1956 Billions of 2012US$ End of Year Balances in Highway Trust Fund, End of year balances CBO balance projec9on Transfer from the General Fund CBO deficit projec9on Funding Crisis: Source: U.S. Congressional Budget Office projec9ons published in 2013 Increasing costs of construc9on Aging infrastructure increasing cost of maintenance / renewal Improving fuel efficiency (e.g. electric vehicles pay no gas gax) Poli%cal opposi%on to raising gas tax 7

8 Federal P3 Policy Provisions Taxfree treatment of municipal bonds TIFIA 2012 highway/transit legisla9on (MAP21)

9 U.S. Government P3 Policy: TaxFree Treatment of Municipal Bonds Municipal bonds (state and local) a principal source of capital for infrastructure Interest not subject to federal tax to the bond holder Taxfree treatment lowers interest cost to issuer 2.40% for 20year AAA municipal bond 3.65% for 20year AAA corporate bond Savings of 1.25% (as of May 17, 2013) Significant federal indirect policy for project finance Municipal bond market is very large Total municipal debt: $3.7 trillion (2012Q4, SIFMA) Historically stable at 1520% of GDP Types: General Obliga9on Bonds ( full faith and credit ) Revenue Bonds (guaranteed by project revenue) Issue: How does municipal finance affect lifecycle asset management in prac9ce? 9

10 U.S. Government P3 Policy: TIFIA Transporta9on Infrastructure Financing and Innova9on Act (1998) Main federal infrastructure direct financing program affec9ng P3 market Credit assistance with fixed rates lower than private market e.g., 3.12% for a 35year loan (May 16, 2013) Assistance Types: Direct Loan Loan Guarantee Cumula9ve TIFIA Project Assistance, Maximum share of project costs financed by TIFIA: 49% (increased from 33% in 2012) Subordinate to other project debt Springing lien in case of default TIFIA total: $10.5 Billion, for projects totaling $42.2 billion (nominal) Ac9ve: $8.9B for projects of $32.2B Re9red: $1.6B for projects of $6B 10 Millions of 2012 US$ $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $

11 U.S. Government P3 Policy: 2012 Highway/Transit Legislation MAP-21 Moving Ahead for Progress in the 21st Century Act (July 2012) Increased Budget Authority for TIFIA $750 million for 2013 (up from $122 million) $1.0 billion for 2014 Require USDOT to Develop policy and procedures to promote public understanding of private par9cipa9on in infrastructure Develop best prac9ces and standard public- private partnership transac9on model contracts and encourage their use. 11

12 P3s: State Initiatives States are the primary locus of P3 policy in the U.S. 33 U.S. States and one U.S. territory with statutes enabling the use of various P3 approaches for transporta9on infrastructure Most ac9vity in California, Florida, Texas, New Jersey, Massachuseds, New York and Virginia (Puerto Rico also ac9ve) Financing Mechanisms Revenue Sources Direct user charges Shadow tolls Availability payments Debt/Equity Sources Private equity Bonds, including municipal bonds Bank loans 12

13 P3s: State Ini9a9ves States with P3 Legisla9on (March 2013) Source: Federal Highway Administra9on Office of Innova9ve Project Delivery (March 2013) 13

14 P3s: State and Local Initiatives Number of P3 Projects Reaching Financial Close in the U.S Numbers of Project Note: includes transporta9on, water and sewer, school, prison and other nonmilitary buildings. Source: Public Works Financing and U.S. Department of Treasury, Bureau of Public Debt 14

15 Number of U.S. P3 Projects, , By Type water/ wastewater (105) airport (32) water (23) building (161) wastewater (104) Miscellaneous (6) toll tunnel (5) motorway (69) toll road (93) rail (43) toll bridge (22) seaport (13) Note: including both proposed P3s, completed P3s and P3s under construc9on. Source: Public Works Financing parking (14) 15

16 P3 Case Study: I495 Capital Beltway Express Lanes 14mile (22.5 km) Variable Toll Express Lane $1.7B total cost, 75year concession Located in Washington Beltway in Virginia Original concept not approved (1994) High cost: $2.68 billion $3.25 billion 170 acres (70 hectares) of right of way 300 homes displaced 32 commercial proper9es displaced 8 public parks disturbed Source: Adapted from U.S. Census Bureau 16

17 P3 Case Study: I495 Capital Beltway Express Lanes Unsolicited proposal by Fluor Corp. (2002) DesignBuildFinanceOperateMaintain HOT lanes, less costly design features (no homes displaced) Transurban joined in 2004 Construc9on Constructed 14 miles (22.5km) of express lanes Rebuilt exis9ng 14mile (22.5km) freeway, rebuilt 50+ bridges, upgraded 12 key interchanges Completed on9me, onbudget, and began opera9on in November 2012 Weak start to traffic volume (not unusual) Currently an extension, I95 Express Lanes, is under construc9on Source: Adapted from U.S. Census Bureau 495 Express Lanes Ave. Daily Toll Revenue Ave. Daily Trips Ave. Workday Trips st Quarter Note $27,499 Grew from $18,408 in Dec ,008 Grew 13% from Dec ,294 Source: expresslanes.com/feature/

18 P3 Case Study: South Bay Expressway (SBX) First private toll road funded by TIFIA 9.5 mile (15km) privately developed extension of SR125 in San Diego, CA California Transporta9on Ventures, Inc (CVT) Contract Type: BuildOperate Transfer (BOT) Actual Cost $635 m (2007) Private Equity $130 m TIFIA $140 m Commercial Debt(banks) $340m Donated right of way $48m Source: Adapted from U.S. Census Bureau 18

19 P3 Case Study: South Bay Expressway (SBX) SBX spent $50 m and 9 years to obtain environmental permits Addi9onal costs absorbed mainly by the private developer (2001) Opened in Nov 2007 (15 month delay) Lower than projected traffic Projected : 60,000 / day (2009) Actual traffic: 23,000 / day First P3 to file for bankruptcy for the state of California and TIFIA (early 2010) TIFIA springing lien successfully applied Ownership transferred to: San Diego Associa9on of Governments in April

20 P3 Case Study: VA SR895 Pocahontas Pkwy Concept developed in 1980s but no funding Pocahontas Parkway Associa9on, a 6320 (nonprofit) project company in mile (14km) highway A bridge with 145 (44m) clearance Original project funding sources: $18M State Infrastructure Bank loan $354M tax exempt bond issued by PPA $9M Federal funds for design Opened in 2002, but traffic and revenue lower than projected Transurban acquired the right of a 99year lease, in 2006 Total funding of $611M: $420M Bank debt $55M Subordinated debt $141M Equity contribu9on $140M TIFIA loan Source: Adapted from U.S. Census Bureau In June 2012, Transurban wrote down the asset value to zero, aser severe losses 20

21 Case Study: Chicago Infrastructure Trust Nonprofit organiza9on established by Chicago s City Council (March 2012) Projects may include: Mission mass transit highways freight rail airports mari9me ports (Lake Michigan) Facilitate transforma9ve infrastructure projects in Chicago by offering innova9ve financing strategies to fund those projects. Adract capital from diverse types of investors Achieve and demonstrate real risk transfer to 3rdparty investors Aggregate different governmental agencies within a common plan of finance Create efficient capital structures Support from labor unions 21

22 P3 Policy Program at George Mason University White Papers Research & policy issues white paper Best prac9ces white paper Cosponsoring Na9onal Conference on P3s Partnership with the 25th Annual American Road & Transporta9on Builders (ARTBA) P3 Conference, July 2426, Washington, D.C. Developing outlook for P3 policy in state, regional, na9onal context. P3 Case Studies Graduate & Execu9ve Educa9on Ac9vi9es P3 Research Center at GMU Conference Par9cipa9on & Outreach Ac9vi9es 22

23 P3 Research & Policy Issues White Paper (April 2013) Evalua9ng Risks & Benefits Financial Issues Project Delivery Process & Administra9on Public Educa9on Available at p3policy.gmu.edu 23

24 P3 Lessons Learned/Best Prac9ces White Paper Enabling legisla9on Champions and stakeholder development Project selec9on and agency priori9es P3 administering office P3 procurement plan & process Funding and financing P3 structures Forthcoming at p3policy.gmu.edu

25 Transportation Public-Private Partnership Policy Program at George Mason University School of Public Policy For more informa9on: Visit us at: p3policy.gmu.edu Jonathan L. Gifford, Ph.D. George Mason University School of Public Policy Arlington VA, USA / +1(703)