The Move Toward P3s

In recent years, as public funds have become tighter and the need for infrastructure improvements has expanded, governments and utilities have developed a growing interest in public-private partnerships, or P3s.

While the concept of using private funding to finance infrastructure is not new, the extent to which the federal government has begun encouraging and facilitating such ventures is notable. It appears P3s will play a large role in the future of water and wastewater infrastructure funding.

On Feb. 2, President Obama issued his proposed FY2016 budget, which included cuts to several water and wastewater programs, including to the State Revolving Fund loan program—traditionally the largest source of federal funding for our industry.

However, also part of the president’s budget were several new line items, including the “Rebuild America Partnership” to boost private investment in infrastructure. Among other measures, this program would establish an independent National Infrastructure Bank to leverage private and public capital to support infrastructure projects and would create new tax-exempt Qualified Public Infrastructure Bonds to help states and local communities attract new sources of capital for infrastructure investment projects.

As part of its Rebuild American Partnership initiative, the Obama Administration is creating a Water Finance Center at the U.S. Environmental Protection Agency. According to the announcement regarding the center, it will be designed to work closely with local and state governments, utilities, and private sector partners to use federal grants to attract more private capital into projects and promote P3 models.

WWEMA has been invited by the Administration to participate in an online conference to be hosted by the Build America Investment Initiative Interagency Working Group on Feb. 18. The working group is being co-chaired by Treasury Department Secretary Jack Lew and Transportation Department Secretary Anthony Foxx.

With regard to our industry, this group’s recommendation report notes: “Water infrastructure projects may be ripe for PPPs at the local level, as they offer a clear revenue stream from rate-payers ... Today, private sector investment flows largely through municipal bonds. Public-private partnerships, however, have the potential to increase capital investment in water infrastructure, bring in new technologies, and improve services.”

WWEMA will be monitoring the efforts of this working group and the Administration and advocating for those measures that represent responsible, effective ways to fund our nation’s much-needed water and wastewater infrastructure.