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P3s role in strengthening America’s infrastructure: Setting the record straight

NEW YORK – Samara Barend, a founding member of the Performance Based Buildings Coalition (PBBC) and an AECOM Vice President for P3 Development, is warning that the strategic ability of public private partnerships (P3s) to strengthen the nation’s infrastructure could be harmed if there is continued confusion on Capitol Hill and elsewhere over its fundamental role.

She notes that a recently published article in a national publication inaccurately confused tax exempt financing with Private Activity Bonds (PABs). "We can all agree there have been abuses in the use of tax exempt financing, but PABs were not used for any of the projects described in the article and it reflects the ongoing confusion over the role of PABs which, in turn, harms their ability to strengthen our nation’s infrastructure."

Ms. Barend reminds, "PABs enable governments to combine tax exempt financing with private financing to more efficiently deliver public infrastructure. Since 2001, PABs have facilitated more than $10 billion in innovative transportation projects in the U.S. The recent Ohio River Bridges public-private partnership (PPP) project, which is saving Indiana taxpayers over $200 million versus a traditional public-financed approach, is one of many examples. The Goethals Bridge and the LaGuardia Airport PPP projects in New York will also likely utilize PABs to deliver huge time and cost savings to taxpayers."

A wakeup call to the P3 community
Barend observes, "The P3 community has an obligation to make its story heard including the fact that PABs are an effective means of reducing our reliance on public finance and opening the doors to private finance for the delivery of critically needed infrastructure."

Unlike the transportation sector, the public buildings sector does not have any equivalent form of federal highway loans, and the PABs market which exists is severely constrained. Consequently, the public sector’s inability to combine tax exempt financing with private financing has proven to be a major impediment to a U.S. P3 buildings market for schools, public universities and community colleges, courthouses, and other critical public facilities. Despite the demonstrated value for money benefits of alternative delivery, this "cost of capital" argument has often deterred the public sector from utilizing P3s for buildings projects.

The Performance Based Buildings Coalition is an organization formed by interested P3 sectors ranging from the financial community to the construction industry for the purpose of advocating innovative mechanisms such as Private Activity Bonds so that America may replace and rebuild its aging public buildings such as schools, hospitals and municipal buildings far more efficiently.