MIAMI — With a clear need to invest in infrastructure and a large budget deficit, Puerto Rico is poised to launch its first public-private partnership projects.
“We’re making progress,” David Alvarez said at PEI’s Infrastructure Investor: Southeast forum here yesterday. “I believe once we get one done, we will not stop.”
Alvarez, the executive director of Puerto Rico’s P3 authority, said since the law governing the island’s program was signed in June 2009, a structured program has been developed with a dedicated team and oversight board, which approved eight priority projects last December.
Those projects center around four main areas: toll roads, natural gas plant development, airport improvements, and a water-metering system.
The authority soon will release its first request for qualifications for those P3 projects, Alvarez said.
Puerto Rico’s broad P3 program also covers landfills, reservoirs, and sports facilities, as well as infrastructure for other social programs.
“I think the key for us is to push forward,” Alvarez said, “There is a clear need to invest in infrastructure and also a fiscal constraint.”
However, P3s will not solve all the particular revenue and investment problems facing transportation, a federal official said.
The use of various tools, including the taxable Build America Bond program, has moved transportation financing efforts forward and “opened pathways for more investment in public-private partnerships,” said Regina McElroy, executive director of the Federal Highway Administration’s Office of Innovative Program Delivery.
McElroy said there are successful P3 programs such as Florida’s and Puerto Rico’s. “But as a country, we have a long way two go as far as the transportation story,” she said.
The public does not understand federal transportation funding problems, she said, adding that there is no consensus on how to pay for the lack of funds.
There needs to be a policy addressing new revenue mechanisms, according to Tyler Duvall, a senior adviser at McKinsey & Co. and a former policy adviser to the U.S. Department of Transportation.
Duvall said there are P3 projects coming to market without supporting fundamentals and there are programs that do not recognize revenue gaps.
But for high-growth states, the use of tolled facilities is necessary, said Florida Transportation Secretary Stephanie Kopelousos. In the last 17 years, 91% of the state’s new roads and bridges have been tolled, she said.
“That’s our future,” Kopelousos said. “We are not going to see a facility built without tolls on it.”
In outlining the state’s P3 program, Kopelousos said political support and public buy-in is essential.
“Fortunately, we have a Legislature and a governor very supportive of moving forward with public-private partnerships,” Kopelousos said.
While Florida just started its first two P3s based on availability payments, she said the state is now moving forward with a similar concession for a $1.8 billion tolled beltway project in Jacksonville.