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LP Forum: US states seeking inspiration from ‘cool’ Canada

Notwithstanding stronger federal support for American P3s, Canada continues to provide a ‘big bright ray of light’ on how to put infrastructure projects on track, delegates heard in New York.

At a time when infrastructure has been placed under the spotlight thanks to President-elect Donald Trump's $1 trillion investment pledge, panellists taking part in Infrastructure Investor's LP Summit in New York this week pointed to the US' northern neighbour as a potential source of ideas on how to channel the money.

Jodie Misiak, director of project development within the US Department of Transportation's Build of America bureau, underscored the progress made since the latter was created as a one-stop shop for project sponsors looking for federal support.

She admitted that prior to its existence the array of tools available to states looking to fund projects, from TIFIA loans to private activity bonds, was not always catapulting procuring authorities into action. “For a state not ready to invest in too much consultant support this was simply overwhelming.”

Misiak added that Build America was now a strong structure that the next administration could “choose to enhance” in order to direct more private capital towards infrastructure.

PPPs, noted Emmett MacCann, a managing director at Oaktree, had long suffered from unfavourable media coverage and limited understanding of their nature among the public. “The current administration has done a good job moving PPPs from being a bad word to becoming more entrenched, achieving this by focusing on their positive attributes.”

Michael Cheroutes, president of ROADIS, was keen to emphasise the crucial role played by federal incentives. “Whether states or local authorities go down the public or the PPP route often hinges on cost of capital considerations. Changes to the tax code make it easier for governments to go into that direction.”

But for MacCann, such support was more an enabler than the decisive factor in why infrastructure schemes eventually happen. “At the end of the day projects are state-driven, as asset ownership lies at the state or local level. Federal support can accelerate that velocity of projects but they can't be the cause.”

At that point AECOM's Samara Barend, the panel's moderator, turned to the “big bright ray of light” of North America's PPP market, personified by Mark Romoff, president and chief executive of the Canadian Council for Public-Private Partnerships. 

Romoff was keen to highlight the role played by Justin Trudeau, Canada's “cool” Prime Minister, in driving a transformative infrastructure agenda forward. “He campaigned on creating deficit in order to fund infrastructure. Since then 75 percent of the electorate favours going into that deficit. Up to C$180 billion ($136 billion; €126 billion) of projects are going to be rolled out across provinces around the country.”

He noted that Canada differed in its approach to procurement, choosing to make its projects “less political” with “bureaucrats” taking over a process once under way. “We've looked at the UK, Australia to identify best practice, and then we added our own secret sauce. I think the same is going to happen in the US.”