Dean, Goldsmith to Form Working Group to Provide Guidance on P3s

Former Vermont Gov. Howard Dean and former Indianapolis Mayor Stephen Goldsmith yesterday announced the launch of a working group that will push for the creation of a new federal "center of excellence" that municipal and state officials could consult for guidance on public-private partnerships.

The working group, called the Council of Project Finance Advisors, will urge lawmakers to form an independent governmental body called Partnerships U.S. that would act as a resource for local and state officials as they develop P3s for transportation, energy, water and sewer, education, utilities, health care, and other sectors.

The CPFA will include members from engineering and construction firms, private equity and pension funds, labor unions, financial institutions and banks, trade groups, academia, and former senior officials in government.

"Right now there is not a place where [officials] can go other than high-paid consultants" and there is "no place to get independent advice" on whether P3 ideas are viable or properly valued, said Frank M. Rapoport, a CPFA member who chairs the global infrastructure and public-private partnerships practice at McKenna Long & Aldridge LLP. "Government employees are getting outmanned by the private sector."

The center of excellence would provide technical expertise to governors or mayors as they prepare P3 projects, Rapoport said. It would not provide political advice on the projects, but it could offer some "political cover" as state and municipal officials develop plans, he said, adding: "They can say that they consulted with somebody from Partnerships U.S., which should be perceived as independent."

The group already includes Marcia Hale, intergovernmental affairs director under President Bill Clinton. In addition, Flatiron Construction Corp. in New York has agreed to join the CPFA working group, according to Rapoport. One-year memberships of $10,000 for each participant will fund the CPFA's efforts, he said.

The CPFA hopes to draft legislation within a year, engage in a "grassroots advocacy effort," and "get the money appropriated to set up this U.S. agency," Rapoport said. He estimated that the new agency's annual budget would be $25 million, and that it would need stringent conflict of interest rules.

The announcement comes as P3 deals such as the Port of Miami Tunnel are having difficulty nailing down private investment, and as the $1 billion privatization of Chicago's parking meter system faces scrutiny for possible mismanagement and consumer fraud.

Although there are already some P3-related programs administered by various existing federal offices - such as the Department of Transportation's Transportation Infrastructure Finance and Innovation Act loan program - the underlying belief of CPFA members is that there should be a single agency focused on P3s over various sectors.

"They may disagree with this, but I don't think any agencies sit down and provide substantive technical advice to governors or mayors," Rapoport said.

The creation of the P3 federal center also would send a signal to governors and mayors that Washington expects them to look to the private sector when they are low on funding, he said.

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