In December 2025, the new U.S. Department of Transportation Advisory Board had its second meeting with Transportation Secretary Sean Duffy. One of its recommendations was that the federal government should encourage state and local governments to recycle existing revenue-generating infrastructure, with investors entering into long-term brownfield public-private partnership leases and the up-front concession fee being used by the state or local government to fund other needed infrastructure.
The advisory board made two specific asset recycling recommendations: First, the Department of Transportation (DOT) should offer a modest financial incentive (as Australia did a decade ago) to encourage infrastructure asset recycling projects.
Second, the federal government should allow the infrastructure entity’s long-term tax-exempt bonds to be transferred to the public-private partnership acquirer rather than being defeased or paid off.
I recall attending an asset recycling conference in Washington, D.C. in 2017 sponsored by the Australian embassy. In 2018, the transportation department published The President’s Initiative for Rebuilding Infrastructure in America, which discussed Australia’s asset recycling program and laid out tax and policy reforms to encourage asset recycling and the increased use of long-term P3 leasing by state and local governments. But there was no immediate follow-through.
In the lead-up to the 2021 Infrastructure Investment and Jobs Act (IIJA), in response to congressional staff requests, I prepared a four-page memo addressing questions about asset recycling. Those staffers devised some language on this subject, and a small asset recycling provision was included in the IIJA legislation.
The bill put the DOT’s Build America Bureau in charge of implementing this modest asset recycling provision. The congressional staffers I’d advised were disappointed that no actual asset recycling program emerged in response to the modest language in IIJA. The Build America Bureau has provided small grants for state and local governments to study assets that might be candidates for recycling. But I’m worried that few people see what asset recycling is and how beneficial it could be in the United States, especially in the coming decades when our nearly bankrupt federal government will no longer be able to borrow huge sums of money to hand out to states for highways and other public works.
Those favoring this important new tool should demonstrate to legislators and opinion leaders that it is not just an Australian asset-recycling success story. There are several excellent examples of large-scale U.S. transportation facilities being recycled, with the up-front proceeds used for worthwhile public purposes. Here are several examples.
- In 2005, the city of Chicago entered into a 99-year lease of the Chicago Skyway for an upfront payment of $1.8 billion. The proceeds were used to retire the Skyway’s outstanding debt, to pay off some city bonds, and to establish a long-term reserve fund.
- The state-run Indiana Toll Road had been losing money and needed modernization. Then-Gov. Mitch Daniels invited private-sector proposals and, in 2006, leased the facility for 75 years, with an upfront concession payment of $3.8 billion. Those funds were invested in a statewide highway improvement program and in a $500 million trust fund for long-term highway maintenance.
- Puerto Rico leased its PR-22 and PR-5 toll roads in 2011 for 40 years, receiving an upfront payment of $1.136 billion from an investment bank and Abertis Infrastructure. The proceeds were used to strengthen Puerto Rico’s fiscal position. In 2013, it also leased the San Juan Airport to an investment fund and an airport company for 40 years. The winner made an upfront payment of $615 million and agreed to invest $1.4 billion in badly needed upgrades to the airport.
The upcoming surface transportation reauthorization bill offers a new opportunity for asset recycling, especially given the DOT Advisory Board’s asset recycling recommendation. The 2018 President’s Initiative for Rebuilding Infrastructure in America report, researched and written by DJ Gribbin and others, includes recommendations for federal policy to encourage asset recycling. It also includes a quote from the Bipartisan Policy Center endorsing a U.S. version of Australia’s asset recycling program. The report notes that such a program would be potentially attractive to institutional investors, such as pension funds. And I would add infrastructure investment funds, insurance companies, and sovereign wealth funds.
Here are some of the specific proposals in this still-timely report:
- Establish a federal infrastructure incentives program that would offer incentive grants to state and local governments with brownfield assets that may be candidates for recycling. Australia’s national government did this, with positive results.
- Increase or remove the federal cap on tax-exempt private activity bonds (PABs) for P3 infrastructure projects.
- Expand private activity bonds to other transportation modes, including airports, docks and wharves, and waterway projects.
- Provide change-of-use provisions to preserve the tax-exempt status of existing bonds when the facility is leased via a P3 concession—in other words, the existing municipal tax-exempt bonds could be taken over by the P3 entity and remain tax-exempt for the duration of the bond’s term (as recommended by the DOT Advisory Board).
- For airports, change the federal requirement that any P3 at a U.S. commercial airport must receive the consent of 65% of the airlines operating at that airport. The report proposes changing this to 50%.
- For transit projects, the report recommends that the existing “Expedited Project Delivery for Capital Investments Grants Pilot Program” be codified without the current limitation on the number of projects and without its labor provisions that require private contractors to employ union labor.
These changes are all worthwhile, whether or not they are part of a federal effort to expand the use of asset recycling. They would remove barriers to the wider use of public-private partnerships and, in doing so, make a federally sponsored asset recycling program more attractive to financiers and project developers.
A version of this column appeared in Public Works Financing.