Grading the states on their public-private partnership sectors

Global Infrastructure Investment Association

California, Georgia, Florida and Colorado are among 10 states that earned top marks in a first-of-its-kind report card that ranks all 50 states, Puerto Rico, the U.S. Virgin Islands and Washington, D.C. on the strength and depth of their public-private partnership sectors.

Maryland, Pennsylvania, Texas, Virginia, Washington, and the District of Columbia also earned A grades, based on their "robust, diverse P3 legislation, backed by a strong pipeline of projects," according to the report, produced by P3 advocates Global Infrastructure Investment Association and P3 Bulletin. The states "also have a good track record in delivering projects and are at the forefront of P3 development," the report said.

The U.S. P3 sector is a patchwork industry driven by state legislation, which lays the ground rules, and a handful of federal financing programs and policies. The country as a whole lags much of the globe when it comes to partnering with the private sector to lease existing infrastructure assets or construct new ones under design, build, finance, operate and maintain models.

The report card ranks the governments based on whether they have P3-enabling legislation and if so, how broad it is. Other criteria include whether the governments have a dedicated P3 office and staff, allow unsolicited proposals and the depth of their project pipeline.

Based on those criteria, 15 states earn Bs, including  Arizona, Indiana, Louisiana, Massachusetts, Michigan, New Jersey, New York, and North Carolina.

Fourteen states or territories sport more mediocre C grades, with Puerto Rico, Illinois, Oregon, South Carolina among them. Those states have "often dabbled in P3 projects without making significant in-roads," the report said.

Among the lowest-ranked states and territories, with D grades, which usually have little or no P3-enabling legislation or plans to use them for upcoming projects: Iowa, Mississippi, New Hampshire, Vermont, Wisconsin and the US Virgin Islands.

The report comes amid a shifting federal attitude toward P3s and as Congress crafts major legislation, like the next surface transportation reauthorization, that could impact the sector.

A U.S. Department of Transportation advisory board is pushing Transportation Secretary Sean Duffy to embrace P3s, including creating a P3 office and loosening bond rules to encourage cities and states to privatize their existing assets. Meanwhile, the Trump administration is pursing the delivery structure for Union Station in Washington, D.C. and New York's Penn Station.

Like some transportation lobbyists, the GIIA is lobbying for Congress to increase access to private activity bonds. Tax credit bond programs would also help "cut financing costs, attract more investors, and remove artificial constraints on project delivery," said Jon Phillips, GIIA's chief executive in an email to The Bond Buyer.

"La Guardia and JFK airports, and now Penn and Union stations, demonstrate the increasing attraction and success of the P3 model in delivering transformational transportation projects," Phillips said. "We urge Congress and federal agencies to expand and align existing programs that support P3 use. The Build America Bureau should be strengthened to help states establish P3-enabling legislation, create P3 offices, and access standardized project procurement processes."