Rebuilding (and financing) America’s Infrastructure through PPPs

Rebuilding (and financing) America's Infrastructure through PPPS Our country's infrastructure is in need of repair. Of the 600,000 bridges located over 4 million miles of roads that the government is responsible for maintaining, 1out of 9 (or 70,000) is deemed structurally deficient. 32% of America's major roads are in need of extensive rehabilitation. As a result, drivers in the U.S. annually spend 5.5 billion wasted hours in traffic, resulting in costs of $120 billion in fuel and lost time. The estimated investment needed to fix this problem is $3.6 trillion by 2020.' How can we fund improvements? Historically, our economic strength has been built upon the foundation of private investment in infrastructure including: Lancaster Turnpike (1795) Transcontinental Railroad (1869) Golden Gate Bridge (1937) Today, this model has evolved into a multi-billion dollar a year industry known as Public Private Partnerships (PPPS) that are leading the way to getting major infrastructure done. How PPPS work - one example After public input and long-range planning, the government decides to build a new hospital, school- road, such as Florida's I-4 Ultimate, the largest U.S. PPP. This project involves expanding the Orlando portion of the interstate connecting Tampa and Daytona Beach. Advisors, designers, contractors and operations and maintenance providers work together, from day one. An equity partner is brought on to finance the project and the team works together on a joint solution. They are only awarded the job if the solution is sustainable, cost efficient and environmentally friendly. Throughout the project contract, the client (Florida Department of Transportation or FDOT) makes an annual payment, incentivizing l-4 Mobility in top condition, so things like potholes, broken street lights and weather conditions are taken care of quickly - otherwise they do not get paid. The equity members form a new company, such to keep the road available and as l-4 Mobility Partners LLC, with a single mission: to build the road and make sure it meets the agreed upon contract of 40 years. 27 On its own, it would have taken FDOT 27 years The public keeps ownership of the road and has an insurance policy that when the road is taken to complete this project, versus the less than 7 years it is taking under the PPP model. back over by FDOT, it is still in peak condition and debt free. National PPP progress: PPPS are becoming more common in the U.S., especially in the transportation sector. PPPS are also expanding to other sectors such as aviation, higher education and healthcare. Since 2006 25 U.S. transportation PPPS were awarded and reached financial close Transportation sector makes up 94% PPP enabling legislation: 33 Market leaders: Virginia, Florida, Texas, Indiana of total PPP deal value PPPS provide hundreds - and even thousands - of jobs to the local community throughout the life of the project. Now and into the future, PPPS will be essential for fixing our crumbling infrastructure safely, on time, on budget and of the highest quality. There is such a tremendous need for repair and little public money to pay for it, and meanwhile there's plenty of private money on the sidelines waiting to be invested. Sources 'http://www.cbsnews.com/news/falling-apart-america-neglected-infrastructure/, Wall Street Journal, http://www.infrastructurereportcard.org/, http://www.treasury.gov/press-center/press-releases/Documents/Expanding%20our%20Nation %27s%20lnfrastructure%20through%20lnnovative%20Financing.pdf http://www.treasury.gov/press-center/press-releases/Documents/Expanding%20our%20Nation%27s%20lnfrastructure%20through% 201nnovative%20Financing.pdf SKANSKA skanska.com/ppp