PPP, Infrastructure Investment Slowed in 2020, Pipeline Strong
Editorial StaffThe Facts -
- Public-private partnerships (P3s) in the US saw a dip in activity last year, but long-term trends show growing numbers, particularly in the southeast region.
- Political opposition and lack of P3 legislation continue to hinder infrastructure privatization in many US states, keeping the country behind globally.
- Infrastructure funds dropped significantly last year, but the total raised by the top 100 funds reached $1 trillion over five years for the first time.
U.S. Public-Private Partnerships Show Promising Trends Despite Last Year's Dip
Despite a weakened public-private partnership (P3) activity in the U.S. last year, the long-term trend shows a rising number of P3s with a healthy project pipeline and eager infrastructure funds. The southeast region, particularly Georgia, Louisiana, and Tennessee, remain the leading front runners, with big-ticket projects on the horizon.
These projections are based on the conclusions of recent annual reports by Reason Foundation, a libertarian-leaning think tank that monitors public-private activity globally.
"There are more real projects committed to or in the planning stages than most of the years I've been writing these reports," said Robert Poole, Reason's director of transportation policy, in the Annual Privatization Report.
During 2023, five surface transportation P3 projects worth $8.56 billion reached financial closure in the U.S., down from eight projects totaling $12.1 billion in 2022, according to the 2024 surface transportation privatization report.
The only newly financially closed P3 was the Metropolitan Transportation Authority's "Rapid Station Accessibility" project, marking the MTA's first P3.
"The trend is still positive despite the U.S. market recovering from the COVID years," said Baruch Feigenbaum, Reason's senior managing director of transportation policy.
However, Feigenbaum notes that P3 activity is heavily concentrated in about eight states. He suggests that states such as California and Texas could benefit from increased P3 use, which is currently hindered by political reasons.
The southeast, particularly states like Louisiana, Georgia, and Tennessee, has become the most active region for P3s in the United States due to dwindling gas tax revenue and growing congestion. They are turning to tolls to manage these issues.
Georgia, for instance, has recently advanced a major P3 project to add toll lanes to I-285 and along Georgia 400. Louisiana has restarted a $2.1 billion project to replace the nearly 70-year-old Calcasieu River Bridge and renovate and widen the adjacent nine-mile Interstate 10 corridor.
Infrastructure funds raised $112 billion last year, a significant 35% drop from the previous year. However, the top 100 funds have raised over $1 trillion in the past five years. Public pension systems, such as the California Public Employee Retirement System, also continue to show interest in infrastructure investments.
"If more state legislators were aware of the connection between the financial viability of their retirement systems and the [systems'] ability to invest in infrastructure, there might be more P3 legislation," Poole suggested.
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