InfrastructurePublic Policy Action

Public-Private Partnerships

By May 10, 2013 No Comments

A Public-Private Partnership (PPP or P3) is a contractual agreement between a public agency and a private sector entity resulting in greater private sector participation in the delivery and/or financing of infrastructure projects.

With a $700 billion+ infrastructure deficit within the State of California, the LAEDC believes that we need additional tools to ensure critical infrastructure projects can be brought online more quickly, with less cost (freeing up funds to be spent on other projects), and overall improved projects.  As such, we support increased accessibility to and utilization of P3s by local and state agencies.

Key Points to Remember:

  • A P3 differs itself from privatization with the level of public control and oversight in P3.
  • P3s can have advantages, such as reducing development risk; reducing public capital investment; mobilizing excess or underutilized assets; improving efficiencies/quicker completion; better environmental compliance; improving service to the community; improving cost effectiveness; sharing resources; sharing/allocating risks; and mutual rewards.
  • P3s have been widely used in a variety of sectors including transportation, water/wastewater, urban development, utilities, financial management, and schools, etc., but have seen greater utilization internationally.

Data & Analytics:

LAEDC Efforts:

What’s Next?:

Legislative Updates:

The LAEDC recommends taking the following action at the state level:

  • Increase funding capacity by clarifying that private sector financing (and capital) can take several different forms, e.g., cash, carrying costs, in-kind contributions, loans, etc.— rather than the more limiting “investment capital” definition used in the existing statute
  • Clarify that the public sector has the authority to co-invest in the infrastructure project
  • Increase and provide greater flexibility in terms of the types of post-construction operations and “control” methods that the private sector and public sector can utilize—rather than being limited to leasing or ownership in order to open up additional options that may better fit the structure of the partnership
  • Eliminate the (current 35-year) time requirement for lease, ownership, or other use by a private sector entity
  • Provide greater flexibility in the selection of a private sector financing partner
  • Apply the P3 authority to “non-revenue producing” infrastructure assets as well as broadening its applicability to revenue-producing assets, such as sewer systems and broaden P3 applicability to the state government—rather than to local agencies only
  • Establish a center of excellence for P3s, so local governments have a base of best management practices expertise to consult when considering P3s

(last updated on July 10, 2013)