Social infrastructure public-private partnerships (PPPs) in the US, outside of military and student housing, are nowhere near as popular as they are in Europe, Australia, or even north of the border, in Canada. But to the potential delight of many investors and developers, there could be a sea change in store.
Recently, Balfour Beatty Campus Solutions, a division of UK-based developer Balfour Beatty, revealed that it was expanding its business with the addition of Jim Short as senior vice president. The new hire comes as the company pushes to pursue new opportunities in university social infrastructure that go beyond student housing and is part of a wider plan that is seeing the firm deploy professionals throughout the US.
Universities are peppered with facilities that could potentially be built and operated using PPPs, such as student unions, convocation centres, administrative and academic buildings as well as parking facilities.
“Universities are under a lot of fiscal pressure now,” noted Adrian Moore, vice president of non-profit think tank Reason Foundation. “They don’t need to spend money. We can clearly say if you do a PPP for some of your facilities – using that term broadly – that frees up money for research and classrooms and schools don’t have to raise tuitions.”
Arguably, the US should be a source of stronger deal flow when it comes to social infrastructure, especially in the higher education sector. After all, colleges and universities already have a desired revenue model in the tuition fees that public and private schools collect from students. The UK – a much more developed social infrastructure market – is only starting to generate the sort of income from fees US universities have enjoyed for years.
Balfour Beatty, for its part, would not provide clues on how it intends to work with public and private colleges and universities to form PPPs. But other sources contend that there are sure ways to structure these deals. Land owned by universities or colleges, for instance, can be used to subsidise the cost of projects. Couple that with a percentage of fee income and voila, there is a PPP in the works.
Granted, change will not happen easily or quickly. After all, the use of PPPs throughout the country for other, more traditional projects, such as toll roads, continues to face headwinds. But as Moore points out, practice makes perfect: “The best way to advance the ball is to have some experience and success. Doing any [social infrastructure PPPs] will help more to happen in the future.”
Whether Balfour Beatty will enjoy the same sort of success in the higher education market that it has experienced with military housing PPPs remains to be seen. But if it does, the future of US social infrastructure could look brighter, as others are likely to follow in its footsteps.
As Reason Foundation’s Moore aptly points out: “Success begets repetition”.