Putting the Public First in Public-Private Partnerships

Source: Gabrielle Gurley, The American Prospect, April 26, 2018
 
… More than a decade later, the Port of Miami Tunnel is the marquee example of a public-private transportation infrastructure partnership. … But the tunnel’s success is deceptive, since the unique factors that converged in South Florida cannot be replicated everywhere. For every Port of Miami Tunnel, scores of ill-conceived projects dot the American landscape. The United States lags behind not only in basic maintenance of existing assets at the end of their life cycles but in building the next generation of roads, bridges, rail, tunnels, and aviation projects. With public funds scarce in a climate of tax-cutting and budgetary austerity, the risk is that the contactor/partner pays the up-front costs but sticks future generations of taxpayers and rate-payers with exorbitant charges. … But states and municipalities can learn to appreciate the differences between partnerships that put the public first and the rip-offs that erode public confidence in government and drain public coffers.

… The Trump administration’s version of an infrastructure initiative relies heavily on private financing, which may or may not materialize. … But the Trump framework is only an exaggeration of recent trends. At best, new fiscal pressures can lead public officials to get creative, seeking private partners who may bring superior engineering, financing, and legal expertise, and better attention to maintenance and operations. But private-sector involvement does not automatically mean a better outcome. Citizens and public officials often forget that the private sector’s prime motive is profit, not philanthropy. If a firm cannot clear a good return on an investment, either the deal will not materialize or the terms will be onerous to the public. Public debates can be marred by false expectations, and confusion or obfuscation of what distinguishes a good partnership from a rip-off. …