The U.S. Department of Transportation (DOT) should share lessons learned about innovative infrastructure financing programs with EPA and the U.S. Army Corps of Engineers as the latter agencies work to stand up the new Water Infrastructure Finance and Innovation Act (WIFIA), according to a new report from the House Transportation and Infrastructure (T&I) Committee. The recommendation came as part of a new bipartisan report on how public-private partnerships (P3s) may be called upon to help finance improvements to the nation’s infrastructure.
The report, which focuses on methods for overcoming barriers to P3 investment in all modes of transportation, economic development, public buildings, water, and maritime infrastructure, is the product of months of work by T&I’s Panel on Public-Private Partnerships, which committee members organized in January. The panel sought to identify the role P3s currently play in infrastructure projects, whether P3s enhance project management and delivery beyond the capabilities of governmental agencies, and how to balance the needs of the public and private sectors when moving forward with P3 projects.
The panel’s analysis of P3s in the water and wastewater sector found that “municipally owned water and wastewater utilities traditionally have not taken advantage of private sector investment capital outside the traditional municipal bond market,” even though political pressure can at times make it difficult for public water authorities to win approval for needed rate increases. The report went on to explain that at least 70 percent of local water utilities use tax-exempt municipal bonds to finance infrastructure spending – and this robust bond market has reduced the incentive to explore P3s. As a result, “there is little empirical data on the successes or challenges of financing water infrastructure projects or services” through P3s.
Nevertheless, driven by the success of private investment in the transportation sector, the panel urged EPA and the Army Corps to explore DOT’s experiences with P3s as they implement the new WIFIA program. WIFIA is based on a similar loan program (TIFIA) that has spread more than $15 billion credit assistance among loans to 48 major transportation projects across the country.
While WIFIA does not require the use of P3s or private funding to complement low-interest federal loans delivered through the program, the law allows municipalities to work with private stakeholders on financing plans for major projects.