Although international programs offer many valuable lessons, a distinct difference prevents any PPP program in the United States from resembling the Private Finance Initiative in the United Kingdom. In the United States, the control of infrastructure funding and the laws affecting its delivery and financing rest at the state, not the federal, level. This increases the variations and frequently frustrates the involvement of global PPP participants comfortable with greater centralized control and standardization.
PPP activity varies substantially across the states. According to the National Conference of State Legislatures, 28 states and Puerto Rico had PPP-enabling statutes as of March 2010, but the parameters for private-sector participation in public projects were not uniform.
One international approach gaining adoption by U.S. PPPs is the use of public-sector comparators (PSCs) and value-for-money (VfM) analysis. A VfM analysis independently validates that a proposed PPP project would provide more value to the public sector than other available financing and delivery options. The PSC is a key to the analysis, establishing the cost and schedule of the public-sector delivery option for comparison. Canada and New Zealand offer several examples of applying the VfM method. A consistent and thorough application of this tool provides a transparent vetting process to assure that the PPP is upholding the public interest.
Recent innovations in PPP configurations have incorporated federal sources of assistance, including loans under the Transportation Infrastructure Finance and Innovation Act (TIFIA)1 and tax-exempt transportation Private Activity Bonds (PABs)2. Also of interest is the availability payment model, which offers long-term financial incentives for private-sector involvement. Availability payments are made annually by the public sector throughout the course of the agreement and form the basis for private-sector financing.
Other opportunities may be generated by the direct investment in infrastructure by pension funds. The Dallas Police and Fire Pension fund, for example, financed the I-635 LBJ project in Texas. States are using all of the financing tools available to validate and perfect PPPs. Virginia and Texas have the longest-standing U.S. programs, which have yielded many successful projects.
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1 TIFIA is a U.S. Department of Transportation (DOT) credit assistance program for large transportation infrastructure projects. The assistance includes secured loans, loan guarantees, and lines of credit. U.S. DOT makes the awards based on a project's merits and fulfillment of statutory requirements. Details are available at http://tifia.fhwa.dot.gov.
2 PABs allow states to issue and transfer to private companies up to $15 billion in tax-exempt bonds to finance qualified highway, freight, and transit projects. The U.S. Secretary of Transportation allocates the $15 billion.