The devil is in the detail

The general messages from the 5th North American Leadership Forum, organised by CG/LA Infrastructure, were well known to those active in the space: the need to invest in and upgrade US infrastructure; the inability to do so solely through public funding; and the availability of private capital, which for various reasons isn’t being channeled to fill in the gaps.

Whether listening to a public official or the managing director of a major developer, the desire to correct this imbalance was apparent. Finding the way to do so, however, remained elusive.

That said, it’s important to note the measures taken and progress made on the federal level towards that end.

The Office of Innovative Program Delivery (OIPD), created by the Federal Highway Administration in 2008, helps the public sector to explore the possibility of public-private partnerships (PPP; P3) and determining if these schemes are appropriate for various transport projects, its director Regina McElroy explained.

Tool kit

Over the past three years, McElroy and her team have been developing a P3 tool kit comprising legislation and policy, procurement, best practices, and P3 candidate evaluation. They are also working on developing model P3 contracts that will include provisions for toll road concession agreements. The model provisions will serve more as an educational document rather than an across-the-board template, since OIPD understands that one contract cannot apply to every project.

Congressman John Delaney, a Democrat from Maryland, talked about another initiative at the federal government level – the Partnership to Build America Act – which he introduced in May this year. As of September 12, Delaney’s bill had 44 co-sponsors – 22 Democrats and 22 Republicans in the strongly bipartisan House of Representatives.

The bill calls for the creation of a large-scale infrastructure fund that would be capitalised up front with $50 billion – which could be leveraged to $750 billion – without the use of appropriated funds for a period of 50 years. Given the sizeable amount of capital needed to create the fund, the Act includes an incentive for US companies to repatriate some of their overseas earnings tax free. According to Delaney, US corporations have $5 trillion in cash, $2 trillion of which is overseas. The amount that each corporation could repatriate would be decided at auction.

As for the private sector, it is willing to step up and do what the public sector cannot – namely, provide much needed financing. This is something it already does to a certain extent. But in order to further become involved, private sector entities crave certainty, primarily certainty in regulation – something only lawmakers can provide.

Regardless of whether the two sides will find a way to move forward together, the reality surrounding the US, its infrastructure and what it means in terms of jobs, economic growth and competitiveness can be summed up with a statement made by one of the event’s panelists:

“You [the US] continue to be one of the most competitive nations in the world and the quality of life, with all its challenges, is still good,” said Jacques Demers, president and chief executive of OMERS Strategic Investments, the investment arm of the Ontario Municipal Employees Retirement System. “But if you neglect your infrastructure, all this will change.”