1. For more on the benefits of PPP projects in the United States, see William Reinhardt, "The Case for Public- Private Partnerships in the U.S.," Public Works Financing, Vol. 265, November 2011.
2. One study ranks countries such as Australia, France, and South Africa-that are very active in the PPP market-lower than the U.S. in terms of ease of doing business. The World Bank and the International Finance Corporation, "Doing Business 2012," Washington: 2011.
3. Phineas Baxandall, "Road Privatization: Explaining the Trend, Assessing the Facts, and Protecting the Public," Washington: U.S. PIRG Education Fund, 2007.
4. U.S. Department of Transportation, "Status of the Nation's Highways, Bridges, and Transit: Conditions and Performance Report to Congress," 2009.
5. This is because the traditional transportation provision in the U.S.-"Design, Bid, Build"-limits itself only to the separate contracting of design and construction to the private sector. See U.S. DOT, 2009, exhibit 6-19.
6. PPPs can be categorized based on six criteria: new or existing business, new build or refurbishment, the involvement of private upfront financing, delivery of services to single or multiple users, and different sources of project revenue. See Jeffrey Delmon, "Understanding Options for Public-Private Partnerships in Infrastructure," The World Bank Policy Research Working Paper 5173, 2010.
7. William J. Mallett, "Public-Private Partnerships (PPPs) in Highway and Transit Infrastructure Provision," Washington: Congressional Research Service, 2008.
8. U.S. Department of Transportation, "Report to Congress on the Costs, Benefits, and Efficiencies of Public/Private Partnerships for Fixed Guideway Capital Projects," Federal Transit Administration Office of Budget and Policy, TBP-11, 2007. December 2007
9. Government Accountability Office, "Public-Private Partnerships: Terms Related to Building and Facility Partnerships," GAO/GGD-99-7, 1999.
10. There are numerous reports and publications that describe the spectrum of PPPs in greater detail. See e.g., Sasha N. Page and others, "The Risks and Rewards of Private Equity in Infrastructure," Public Works Management & Policy, 13 (2) (2008): 100-113; Mallett, 2010; U.S. DOT, 2009.
11. New York State Commission on State Asset Maximization, "Final Report," June 2009.
12. Value for Money is a quantitative and qualitative assessment of the total costs to the public entity of traditional versus alternative PPP provision of a facility. Total costs may include design and construction costs (if only design/ build), lifecycle costs and facility management costs (in case the PPP considered goes beyond construction phase). See: Infrastructure Ontario, "Assessing Value for Money: A Guide to Infrastructure Ontario's Methodology," 2007.
13. World Bank and the Public-Private Infrastructure Advisory Facility (PPIAF), "Public-Private Partnership Units- Lessons for their Design and Use in Infrastructure," 2007; and OECD, 2008.
14. There is broad literature on the benefits and drawbacks of PPPs. See e.g.: Jose A Gomez-Ibanez, Regulating infra-structure: Monopoly, Contracts and Discretion (Cambridge, MA: Harvard University Press, 2003); OECD, 2008; Leonard C. Gilroy and others, "Building New Roads through Public-Private Partnerships: Frequently Asked Questions," Reason Foundation Policy Brief No. 58, 2007; Baxandall, 2007. In addition, the National Conference of State Legislatures described nine principles to help legislators think through PPP options and purposes. National Conference of State Legislatures (NCSL), "Public-Private Partnerships for Transportation: A Toolkit for Legislators," Denver: 2010.
15. OECD, 2008.
16. UK National Audit Office, "Performance of PFI Construction," 2009.
18. OECD, 2008.
19. Public Works Financing (PWF), "2011 Survey of Public-Private Partnerships Worldwide," 264, 2011: 1-24. PWF defines a PPP as one of the following "three types of long-term arrangements: the introduction of private sector ownership, full or partial, in state owned companies; arrangements where the public sector contracts to purchase quality services on a long-term basis so as to take advantage of private sector management skills incentivized by having private finance at risk. This includes concessions and franchises, where a private sector partner takes on the responsibility of providing a public service, including maintaining, enhancing or constructing the necessary infrastructure; and selling government services into wider markets, and other partnership arrangements where private sector expertise and finance are used to exploit the commercial potential of government assets."
20. Figures as of October 2011. The analysis of transportation PPP projects in the United States uses the data from the "US and Canadian Transportation Projects Scorecard," in PWF, 2010.
21. U.S. Government Accountability Office, "Highway Public-Private Partnerships: More Rigorous Up-front Analysis Could Better Secure Potential Benefits and Protect the Public Interest," GAO-08-44, 2008.
22. World Bank and PPIAF, 2007.
23. Christine Farrugia, Tim Reynolds, and Ryan Orr, "Public Private Partnership Agencies- A Global Perspective," Stanford University Collaboratory for Research on Global Projects, Working Paper 39, 2008.
24. Organization for Economic Co-operation and Development (OECD), "Dedicated Public Private Partnership Units- A Survey of Institutional and Governance Structures," 2010.
25. World Bank and PPIAF, 2007.
26. As exemplified in the case of PPPs, a government failure shows an institutional deficit that diminishes the efficiency of a government measure. While the "market failure" concept has been intensively scrutinized in the economics literature, the "government failure" has picked up attention with the rise of public choice theory and new institutional economics during the last four decades. See William Niskanen, Bureaucracy and Representative Government (Chicago: Aldine- Atherton, 1971) and Charles Wolf, Markets or Governments: Choosing Between Imperfect Alternatives (Cambridge, MA: The MIT Press, 1993).
27. The creation of the South African PPP Unit was driven primarily by its Treasury Department's concerns over one of the early PPP projects, a 30-year build-operate-transfer contract for two prisons proposed by the Ministry of Public Works. For more details see OECD, 2010.
28. World Bank and PPIAF, 2007.
29. Marcus Ahadzi and Graeme Bowles, "Public-Private Partnerships and Contract Negotiations: An Empirical Study", Construction Management and Economics, 22 (2004): 967-978.
30. World Bank and PPIAF, 2007.
31. Rui Sousa Monteiro, "Public-Private Partnerships: Some Lessons from Portuguese Experience," European Investment Bank Conference on Economics & Finance, 2005
32. The downfall of Arthur Andersen due to its audit scandal around Enron contributed to the restructuring of the public accountancy industry after 2002. The Sarbanes-Oxley Act of 2002 specifically restricts audit companies to provide any other services besides audit for their clients.
33. Ed Farquharson and Javier Encinas, "The U.K. Treasury Infrastructure Finance Unit: Supporting PPP Financing During the Global Liquidity Crisis," PPP Solutions (World Bank Institute: 2010).
34. Philip Green, "Efficiency Review," 2010. Report commissioned by the UK Prime Minister.
35. This is the average for overall transactions costs related to the procurement phase of PPPs, including costs incurred by successful and failed bidders and government. Gerti Dudkin and Timo Välilä, "Transaction Costs in Public-Private Partnerships: A First Look at the Evidence," Competition and Regulation in Network Industries, 1, 2 (2006): 307-330.
36. Government of Québec, Public-Private Partnerships Framework Policy, 2004.
37. World Bank and PPIAF, 2007.
38. Farrugia, Reynolds, and Orr, 2008.
39. These definitions were adapted from the delegation of government tasks in the provision of surface transportation, represented by outsourcing and devolution. Outsourcing is defined as "a situation in which a government organisation retains overall responsibility for the provision of infrastructure, but selectively contracts out aspects of that task to private companies." Devolution is "a situation in which the various operational responsibilities related to surface transport infrastructure provision are placed under the aegis of an organisation specifically created for this task, which is, to one degree or another, independent in its decision-making from political leaders." OECD, 2008.
40. OECD, 2010.
41. Bernhard Müller, "PPP Units: Overview for Germany," Paris: Second Annual Meeting on Public-Private Partnerships, OECD Conference Centre, 2009.
42. This was considered the main driver of setting up Partnership UK as a private corporation, as stated by Ed Farquharson in Farrugia, Reynolds, and Orr, 2008.
43. OECD, 2010.
44. This case study is based mostly on personal communication with John McBride, CEO of PPP Canada, April 19, 2011.
45. PPP Canada, Frequently Asked Questions about the Fund, available at http://www.p3canada.ca/p3-canada-fund-faq. php
46. Emilia Istrate and Robert Puentes, "Investing for Success: Examining a Federal Capital Budget and a National Infrastructure Bank," Washington: Brookings, 2009
47. National Assembly for Wales, "Inquiry into Public Private Partnerships: Concluding Statement and Recommendations," Finance Committee, 2009.
48. World Bank and PPIAF, 2007.
49. This point is strongly emphasized in the case of the state's risk position. Partnerships Victoria, "Guidance Material," 2006, p.17.
50. These savings were calculated in the Value for Money analysis against a risk adjusted Public Sector Comparator at the beginning of the project planning. Peter Fitzgerald, "Review of Partnerships Victoria Provided Infrastructure," Melbourne: Growth Solutions Group, 2004.
51. State Government of Victoria, "About Partnership Victoria." Available: http://www.partnerships.vic.gov.au.
52. Farrugia, Reynolds, and Orr, 2008.
53. Australia Department of Finance and Deregulation, "Building Australia Fund." Available: http://www.fnance.gov.au/investment-funds/NBF/BAF.html.
54. Oliver Jones, "Transportation Reform: Lessons from the UK," Washington: Brookings, 2010.
55. The Infrastructure Australia Act 2008, Division 4 (26).
56. The Council of Australian Governments is in charge of policy reforms that are of national significance and which require cooperative action by all level of government. The heads of the federal government, states, territories and the President of the Australian Local Government Association form this national Council. See The Council of Australian Governments, About the Council of Australian Governments, available at http://www.coag.gov.au/about_coag/index.cfm.
57. Personal communication with Dorte Ekelund, Executive Director, Major Cities Unit, Infrastructure Australia, October 15, 2009.
58. Infrastructure Australia, "Public Private Partnerships." Available: http://www.infrastructureaustralia.gov.au/public_ private.
59. National Public Private Partnership Policy and Guidelines, Volume 6 Jurisdictional Requirements, June 2009.
60. Australia Department of Finance and Deregulation, The National Public Private Partnerships Policy Framework and National PPP Guidelines, Finance Circular No. 2009/02, May 2009.
61. Infrastructure Australia, PPP Projects in the Market as at November 2010, available at http://www.infrastructureaus-tralia.gov.au/public_private/market.aspx.
62. The provinces of Australia are composed of states and territories. The territories function like states but the federal legislation can override their legislation. There are two territories: Australian Capital Territory and the Northern Territory. The District of Columbia is the closest analogue in the United States to the Australian territories, even though the Australian territories are represented in the Parliament.
63. Deloitte Services LP, "Closing the Infrastructure Gap: The Role of Public-Private Partnerships," 2006.
64. Rick Geddes and Benjamin Wagner, "Why Do US States Adopt Public-Private Partnership Enabling Legislation?" Paper presented at the 15th Annual Conference of The International Society for New Institutional Economics, June 16-18, 2011, Stanford, CA.
65. Pew Center on the States, "Driven by Dollars: What States Should Know When Considering Public/Private Partnerships to Fund Transportation," Washington: 2009.
66. NCSL, 2010: Appendix B. State PP Enabling Statutes for Transportation Projects. (Ohio and Illinois also recently enacted transportation PPP legislation). Nossaman LLP, "State Legislation Authorizing Public/Private Partnerships for Transit Projects," Washington: 2009.
67. Personal communication with Jaime Rall, Policy Specialist, National Conference of State Legislatures, March 22, 2011.
68. Personal communication with Jaime Rall, Policy Specialist, National Conference of State Legislatures, October 24, 2011.
69. Benjamin Wagner, "Why Do U.S. States Adopt Public/ Private Partnership Enabling Legislation?" Master's Thesis, Cornell University, 2011.
70. The U.S. Department of Transportation recommends that agencies accept unsolicited bids, but urges caution to avoid any appearance of impropriety. Ellen Erhardt, "Caution Ahead: Changing Laws to Accommodate Public-Private Partnerships," Valparaiso University Law Review, 42: 3, 2008.
71. Wagner 2011.
72. "Notwithstanding any other provision of law, only the department, in cooperation with regional transportation agencies, and regional transportation agencies, may solicit proposals, accept unsolicited proposals, negotiate, and enter into comprehensive development lease agreements with public or private entities, or consortia thereof, for transportation projects." California Streets & Highways Code §143(c)(1).
73. Tenn. Code Ann. §54-3-102(b).
74. Erhardt 2008.
75. 2010 Minnesota Statutes, §160.85, Subdivision 3, available at https://www.revisor.mn.gov/statutes/?id=160.85.
76. Tollroads News, "Highway-212 Stuck in Minnesota Deep Freeze," October 12, 1996.
77. NCSL, 2010.
78. AZ§28-7705
79. Wagner 2011.
80. Gilroy, 2007.
81. LA code (§48.2084): (2)
82. KPMG Corporate Finance LLC, Commonwealth of Virginia PPTA Program Assessment - Phase I Diagnostic Report, May 2010.
83. Virginia Department of Transportation, "Virginia Officially Opens the Office of Transportation Public-Private Partnerships," June 6, 2011.
84. Commonwealth of Virginia, Public-Private Transportation Act of 1995 (as amended,) Implementation Manual and Guidelines, December 2010.
85. Personal communication with Dusty Holcombe, Deputy Director, The Commonwealth of Virginia's Office of Transportation Public-Private Partnerships, July 6, 2011.
86. Senate Bill X 2 4, Title 21, Art 1
87. Personal communication with Robert Udall Glazier, Deputy Secretary for External Affairs, California Business, Transportation and Housing Agency, November 18, 2010.
88. Public Infrastructure Advisory Commission (PIAC), Comments on the Presidio Parkway Public/Private Partnership Agreement, December 2010.
89. Personal communication with Joe Pavona, Director, Michigan Office for Public Private Partnerships, November 29, 2010.
90. Countries with well-developed PPP markets are countries in stage two and three on the PPP market maturity curve, as analyzed in Deloitte, 2006.
91. Sean Randolph, "Framework Conditions for Foreign and Domestic Private Investment in California's Infrastructure: Seizing the P3 Opportunity," Bay Area Council Economic Institute, September 2010.
92. OECD, 2010.
93. Richard Hemming, "Public-Private Partnerships, Government Guarantees, and Fiscal Risk," Washington: International Monetary Fund, 2006.
94. Nossaman, 2009.
95. Randolph, 2010.
96. NCSL, 2010.
97. Section 160.845 prohibits private or public entities that operate current highways to convert them into toll roads, and section 160.98 prohibits a road authority from selling a highway or do a PPP in the form of leasing, Build- Operate-Transfer and Build-Transfer-Operate. 2008 Minn. Laws, Chap. 152.
98. Melissa Maynard, "Slowdown on the Public-Private Express," Stateline, September 16, 2010.
99. Joe Pavona, "Public Private Partnerships: Michigan Approach," Presentation at MDOT-ACEC Partnering Conference, February 4, 2010.
100. Personal communication with Brad Larsen, Director, Traditional and Innovative Finance, Minnesota Department of Transportation, April 20, 2011.
101. See National Conference of State Legislatures, "Partners Project on Public-Private Partnerships." Available: http://www.ncsl.org/?tabid=17528.
102. Personal communication with Jim Hatter, Office of Innovative Program Delivery (IPD), FHWA, June 12, 2009.
103. The Office of Budget and Management (OMB) defines the metropolitan statistical areas and the non-metropolitan areas, such as micropolitan statistical areas. See OMB, Update of Statistical Area Definitions and Guidance on Their Uses, OMB BULLETIN No. 10-02 (Executive Office of the President, December 2009).