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Govs. Paterson, Schwarzenegger and Rendell: "The Moment for Public-Private Partnerships Is Now"

Leonard Gilroy
June 4, 2009, 3:15pm

Over at the Huffington Post, NY Gov. David Paterson, CA Gov. Arnold Schwarzenegger, and PA Gov. Ed Rendell have published an article urging attention to the infrastructure crisis and making the case that the time for public-private partnerships (PPPs) is now:

[I]f we are to finance and build a world-class infrastructure for America, we must seek new solutions. And a promising solution is at hand: public-private partnerships.

By combining government oversight with private-sector efficiencies, we can build more projects; we can build them more quickly; we can improve services for our citizens; and we can lower costs for taxpayers. And by infusing billions of private-sector dollars into infrastructure, public-private partnerships would also put millions of Americans back to work.

Rigorous accountability measures are a necessary part of any public-private partnership. Private-sector companies given the privilege of designing, building or operating public facilities must be held to the same thorough standards as public agencies -- including strict labor and environmental standards.

When these accountability measures are in place, public-private partnerships work. An increasing number of highways -- including the new I-595 in Florida -- are being designed, built and operated by private companies. New York City is building better schools at a lower cost by constructing them as part of larger mixed-use real estate developments. California has passed legislation to expand use of public-private partnerships in conjunction with stimulus spending. In Pennsylvania, the city of Pittsburgh is using public-private partnerships to expand parking in the city center.

And this week, New York's Commission on State Asset Maximization released a report recommending 26 pilot projects statewide -- from high-speed rail to wind power on the Great Lakes -- where public-private partnerships can move projects forward faster and at lower costs.

The moment for public-private partnerships is now. Our nation's infrastructure needs to be repaired and expanded. With 10 million Americans out of work, we need to create jobs. And, due to the recession, states and local governments are facing large deficits, limiting our ability to build.

Additionally, there is great demand among the private sector for these partnerships. Infrastructure assets generate stable, inflation-protected returns that are largely shielded from market volatility. That's why -- despite the overwhelming capital and liquidity constraints facing the global economy -- equity infrastructure funds continue to grow rapidly.

We strongly encourage our fellow governors and mayors to explore these types of partnerships. And we encourage the federal government to help states and local governments advance public-private partnerships.

President Obama, Transportation Secretary Ray LaHood and Congressional leaders have already shown a promising interest in public-private partnerships -- and we encourage them to do even more. For example, in the upcoming federal transportation bill, Congress should streamline bureaucratic processes and allow states and localities greater flexibility in seeking innovative approaches to infrastructure financing.

If you happen to be stuck in traffic, stranded at an airport, or crowded into a tiny classroom, our infrastructure crisis may seem insurmountable. In fact, it's a problem we can solve -- but only if we have the courage to seek new solutions. Public-private partnerships must be a part of that mix. They will help unlock the resources we need to build a world-class infrastructure -- and restore America's competitiveness for decades to come.

All three governors have demonstrated tremendous leadership on PPPs in recent years, taking head-on the difficult task of navigating the politics of a major paradigm shift in U.S. public policy. This was most recently evidenced earlier this week by Gov. Paterson's groundbreaking announcement of the development of a state PPP center of excellence to drive the development of PPP infrastructure projects in New York State, one of the central recommendations of the State Asset Maximization Commission's final report.

We should not underestimate the significance of this call for action. Here we have a bi-partisan mix of governors from powerful states urging the President and Congress to do more to pave the way for states and local governments to embrace privatization in infrastructure development. And at a deeper level it demonstrates that policymakers are embracing the (correct) view that privatization should be viewed as a proven policy management tool. For the sake of Americans' quality of life and the health of our economy, lets hope that DC is listening.

» Reason's Transportation Research and Commentary


Leonard Gilroy is Director of Government Reform


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