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Public Support for Private Infrastructure Investment On the Rise

Leonard Gilroy
June 9, 2009, 7:47am

From Reuters comes news of some welcome polling data for advocates of privately-financed infrastructure and public-private partnerships (PPPs)—an increasing majority (nearly 60 percent) of the public supports PPPs to deliver and modernize roads and other public infrastructure assets:

U.S. voters are increasingly supportive of privatized investment in the country's infrastructure, especially in lieu of tax increases or budget cuts, according to a new poll sponsored by investment banking firm Lazard.

The poll, the result of interviews with 1,000 likely voters nationwide in May, found that 59.8 percent of those questioned support private investment in public assets like roads, airports or stadiums. That was up from a support level of 52.2 percent last year and 57 percent in 2007.

"On the broad question of public private partnerships, if you view that as an available budget tool for governments together with every other alternative that is a budget tool, public private partnerships poll better," George Bilicic, chairman of Lazard's Power, Utilities and Infrastructure business, told Reuters. "That includes cutting spending, borrowing more money and raising taxes." [...]

Voters are more likely to back deals with shorter lease terms, according to the poll. More than half of the respondents polled said they would be in favor of renewable 15-year lease terms in new infrastructure projects. That compares with less than 37 percent support for lease terms of 20 years, 30 years or longer.

Bilicic suggested that the deals could be structured with a 15-year lease that would automatically renew if certain operating standards are met -- a structure that could be beneficial to both investors and voters. [...]

The success of a possible deal could also depend on the type of asset in question. Private investment in convention centers and stadiums, trash disposal, parking garages, rail, airports, and roads and bridges all received more than 60 percent of support in the poll. Assets like wastewater treatment plants, ports, lotteries and drinking water systems were all viewed less favorably.

"In the United States, non-energy infrastructure is a brand new asset class and it's a brand new area of commercial activity," Bilicic said. "The level of constructive creativity has been pretty limited and there's a tremendous opportunity for new structures, new approaches, (and) new ways to work with governments and stakeholders."

» Reason's Transportation Research and Commentary


Leonard Gilroy is Director of Government Reform


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