When you think about who is going to be hit the hardest by pollution, whether it’s conventional air water and soil pollution or climate change, it is very often low-income communities and communities of color. The undercutting of these kinds of protections is going to have a disproportionate impact on these very same communities.
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Department of Transportation
• Policymakers should maintain awareness and promote transparency regarding the continued existence of this loan program and whether private financiers are being disintermediated by the subsidized BAB lending that the private sector simply cannot match.
• Acost-benefit analysis of the federal government’s potential replacement and disintermediation of the private financing sector regarding infrastructure loans, which is not currently performed, should be conducted on a regular basis.
PUBLIC-PRIVATE PARTNERSHIPS
Much infrastructure could be funded through public-private partnerships (P3s), a procurement method that uses private financing to construct infrastructure. In exchange for providing the financing, the private partner typically retains the right to operate the asset under requirements specified by the government in a contract called a concession agreement. In addition, the private partner is given the right either to collect fees from the users of the asset or to receive a periodic payment from the government conditioned on the asset’s availability: If a highway is not open to traffic when it should be, for example, the government’s payment to the private concessionaire is reduced.
The best practice for a government that is interested in using a P3 to deliver a project is for the government first to perform a value-for-money study, which compares the costs and benefits of procuring the asset under a typical procurement against the costs and benefits of utilizing a P3. Since private equity is involved, the financing costs for P3s are higher, but they also are frequently more than offset by the private sector’s ability to generate efficiencies and cost savings in the design, construction, maintenance, and operation of the asset. If the value-for-money study finds that the efficiencies of a P3 and the value of risk shifted to the private sector exceed the additional financing costs, then utilizing a P3 is good public policy because Americans have better infrastructure at a lower cost.
As well as providing better transportation facilities for Americans, P3s offer a number of benefits to governments. Specifically, they:
• Provide access to some of the world’s best talent with vast experience in delivering infrastructure,
• Create incentives for innovation and creativity,
• Shift unique project risks to companies that are familiar with those risks, and