The Center for Transportation Public-Private Partnership Policy sponsored two important panel discussions during ARTBA’s 26th Annual P3s in Transportation Conference. Porter Wheeler, a Center Consultant, organized the panels for the ARTBA P3 Conference, held July 17-18, 2014, in Washington, DC.
New Developments in Transportation P3 Research introduced conferees to recent efforts in academic research. David Earley, Strategic Planning Head at Parsons Brinckerhoff, served as the panel moderator. Panelists included Stanford’s Julie Kim who spoke about her research, “Understanding Political Risk in U.S. Infrastructure Projects.” Michael Garvin of Virginia Tech discussed his paper “Exploring Key Governance Issues for P3s.” Finally, Jonathan Gifford of George Mason discussed “Comparative Data on P3 Projects.”
During panel discussions, Julie Kim emphasized that the U.S. P3 market can no longer be regarded as free from political risks, if it ever was, and understanding and mitigating those risks in the context of the P3 approach are increasingly important factors. Financial uncertainty may pose less of a threat to private investment than political factors. In the past, heavy Federal subsidies have insulated projects from the constraints of private investment. More recently, increasingly fragmented governments pose numerous risks to the complex process of P3 decision- making. Michael Garvin shared that his NSF-sponsored project on P3 governance is cataloguing the variety of formats and is seeking to identify problems as well as ascertain what’s working, as noting that long-term contracts invite renegotiation as the situations evolve and people change out. The focus of the P3 data project, as shared by Jonathan Gifford, is to take an inventory of current practices, identify data needs for better project evaluation and comparison, and develop a prototype database to examine P3 projects, and eventually organize comparable data to verify that the P3 approach speeds up projects and/or reduces costs.
The Growing Role of Intergovernmental Agreements for Mega Projects, highlighted the multi-governmental complexities of several large P3 projects. As an added bonus, the all-important perspective of rating agencies on complex P3s was also incorporated. Corey Boock, Nossaman LLP, served as panel moderator, and the panelists included Lee Saage of San Francisco County Transportation Authority (Presidio Parkway), James Stark, Innovative Project Delivery, Indiana DOT (East End Crossing), Katie Nees of Texas DOT’s Strategic Projects Division (Regional Mobility & Tolling Authorities), and Chee Mee Hu, Managing Director-Project Finance of Moody’s (global rating reports on P3s).
Panel discussants noted that using the P3 approach in a complex landscape adds more moving parts reflecting local conditions. The Presidio Parkway project had many agencies to bring together, including the National Park Service and the Presidio Trust, complicating decision making and financial commitments. In advancing Texas P3 projects, TxDOT must coordinate eight Regional Mobility Authorities and five County Toll Authorities. The East End bridges crossing the Ohio River involve two Governors in a Bi-State Development Agreement. Dispute resolution on the governmental side also becomes more complicated. For Presidio, the lead agency had to wrap (and underwrite) all the multi-party obligations to satisfy lenders. Moody’s noted that multiple participants mean more counter-parties to account for at the same time that long-term governmental availability payments are becoming more prevalent, shifting the focus to complex life-cycle issues and away from demand-risk issues. Moody’s expects to issue a global report on P3s and their financial ratings soon.