In his State of the Union, the president proposed expanding a program that encourages state and local governments to pay for infrastructure projects with public-private partnerships. …. A proposal included in President Obama’s State of the Union that is intended to encourage more private involvement in public infrastructure projects appears promising — but whether it would actually result in more development remains in doubt. The so-called Qualified Public Infrastructure Bonds, or QPIBs, would expand an existing financing tool that allows state and local governments to issue tax-exempt bonds to pay for public infrastructure projects managed primarily by private companies. That program, Private Activity Bonds (PABs), has already been used to support financing for more than $10 billion of roads, tunnels and bridges. For example, tax exempt PABs were used to help finance 29 miles of managed express lanes on Interstate 95 in northern Virginia. Gov. Terry McAuliffe has said the $950 million project, which opened in December, would not have been possible without the partnership of Fluor Enterprises and Transurban, which invested $280 million in the project and will collect tolls and maintain the lanes until 2087. If approved by Congress, the QPIB bond program would expand these kinds of tax advantages to include financing for airports, ports, mass transit, solid waste disposal, sewer, and water, as well as for other types of surface transportation projects beyond what’s allowed in the PAB program. The main appeal of offering tax exempt bonds is that it’s a cheaper way to finance projects: it allows the government issuer to pay back investors at a lower interest rate (compared with taxable bonds) because the investor is saves money by not paying taxes on the interest earned. In addition to being available to fund more types of infrastructure projects, the new bonds would also have no expiration date and no limit to how many a government can issue each year. The QPIB program eliminates a loophole in the PAB program that requires some investors to pay a minimum tax on their interest earned…..
Source: Jocelyn Durkay, National Conference of State Legislatures, LegisBrief, Vol. 23 no. 2, January 2015
As state policymakers continue to look for ways to boost efficient and renewable energy, some are turning to energy banks. Such banks combine public-sector funds with private-sector financing to lower the cost of investing in renewable or energy-efficient technology.
To get a P3 proposal to the finish line, public officials need to keep some important principles in mind.
Source: ARLnow.com, December 17, 2014
Arlington County Manager Barbara Donnellan says the county should close the Artisphere cultural center in Rosslyn. Donnellan made the recommendation at today’s County Board meeting, after being charged by the Board earlier this year to study Artisphere and suggest a way forward for the money-losing, county-run center. …. County staff will be studying options for sub-leasing Artisphere to a private company or a private-public partnership in the “arts, media, technology” space, or returning it to landlord Monday Properties, Donnellan said. ….
Source: Robert L. Bland, Michael Overton, American Review of Public Administration, Published online before print November 25, 2014
From the abstract:
Partnerships that bring together public, private, and nonprofit organizations have become widely used by local governments. But we lack knowledge about the distinct contributions of collaborators to the partnership. This study uses tax increment financing (TIF) in Dallas, Texas, to assess the distinctive roles of public and private partners in achieving mutually beneficial policy outcomes. We find that, while public investment is essential to the partnership’s success, private investment directly increases property values. The city’s greatest contribution is to leverage private investment to create added taxable value in the TIF district. The increased property value provides revenue that is used for public purposes benefiting TIF district occupants. As with other quasi-private institutions that have gained popularity in the new order of governance, the appeal of TIF is its capacity to create public goods with bounded benefits. In addition, both institutional and operational knowledge contribute to the partnership’s success. The city’s experience at establishing new TIF districts and administering existing ones increases taxable value.
Source: William G. Reinhardt, Public Works Financing, Vol. 298, November 2014
As money and power are increasingly concentrated in Washington, the line of supplicants stretches all the way to the U.S. Mint. That has created a “barbarians at the gate” mentality among the congressional conservatives and budget experts who guard the Treasury. Infrastructure advocates of all stripes claim great benefits from more federal grants, budget leveraging and tax help. But so do many others for their programs. … Getting more bang for the buck is an obvious answer to capital scarcity, though it’s one not often cited in the larger discussion about infrastructure spending. Performance-based infrastructure, in the form of public-private partnerships (PPP), is one approach being used by public works agencies to reduce or eliminate schedule and budget overruns on large projects…..
From the summary:
…. Public-private partnerships are a poor mechanism for increasing the total volume of infrastructure expenditures. The controlling factor that constrains overall investment by government is not access to credit; rather, it is the public’s willingness to pay the taxes and fees necessary to service project debts. Sophisticated procurement contracts cannot overcome the basic political challenge of raising tax revenues to support needed infrastructure investment. Similarly, creating a national infrastructure bank, or NIB, likely would not increase the total volume of infrastructure investment….
Source: Francisco González-Gómez, Miguel A. García-Rubio, Jesús González-Martínez, Utilities Policy, Volume 31, December 2014
• High private participation in the industry, concentrated in a few companies.
• There is no guarantee that private manager considers the public interest.
• A significant deficit of regulation and control on privatization process is present.
• The industry problems go beyond the public–private controversy.
• Deep reforms in the regulation affecting the industry are needed.
From the abstract:
This paper critically analyzes the Spanish privatization model of urban water management implemented over the last three decades. The high concentration of private participation in the industry, the absence of competition, and regulatory deficiencies appear to have put the interests of water customers at risk. Improvement of governance is not guaranteed simply by changing water-system management from public to private. In Spain, an array of institutional reforms are needed to rationalize a change in management structure for this service, reorganize technical operations, improve the administrative framework, increase transparency, and promote citizen participation. This paper moves beyond the simple public–private controversy and contributes to the literature by using fieldwork conducted by the authors to assess private participation in the management of urban water services in Spain; by identifying gaps in the privatization processes as well as failures in the industry; and, above all, by proposing reforms to Spain’s institutional and regulatory frameworks for the industry.
A Capital Bikeshare employee involved with the movement to organize a union was fired last week. The company that operates bikeshares across the country says the employee was a supervisor “not legally permitted to engage in union organizing,” while Fhar Miess disputes that. … A majority of Capital Bikeshare’s eligible workforce, 87 percent, have signed union cards. Miess’s card was contested, and he was fired after attending a convention put on by Transit Workers Union Local 100, which is supporting Capital Bikeshare’s unionizing. D.C. owns the bikes, docks and other equipment used by Capital Bikeshare, while it is operated by an outside company. …
Dept. of Labor Investigates Capital Bikeshare Unfair Wages
Source: Mila Mimica and Adam Tuss, NBC 4, June 18, 2013
The Department of Labor has opened up an investigation into unfair wages by Capital Bikeshare, a company one former worker says grossly underpaid him….”Some of the drivers started at $12 or $13 and they are actually supposed to be getting paid $17, $18 to start,” Apunte told News4. “Some of the bike checkers… they’re owed over $12,000. That’s individually.”
Alta Bicycle Share in Portland, Ore. owns Capital Bikeshare in the D.C. area as well as several other programs the U.S. and the world, including New York, the Bay Area and Melbourne….Eighteen Capital Bikeshare employees and former workers sent a letter to Alta president Mia Birk, calling for a repayment of their alleged unpaid wages…
Bikeshare workers turn up volume on wage complaints
Source: Stefanie Dazio, Washington Post, June 19, 2013
Several current and former Capital Bikeshare employees delivered petitions to city and company officials on Wednesday, applying new pressure as they call for a response to their allegations of unfair pay practices. Capital Bikeshare, which is operated privately through a contract with the District’s transportation department, is under investigation by the U.S. Labor Department’s Wage and Hour Division for alleged violations of a federal law requiring District government contractors to pay employees certain wages and benefits….
Source: Michael Grisham, Emily King, Thomas Longoria, Public Manager, Vol. 43 no. 3, Fall 2014
Public managers may need to rely on little-known nonprofit partners for certain areas of service delivery. Here is a tool to evaluate potential partners.