- April 2011: Vol. 4, Number 4

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P3s in the City: U.S. Municipalities Balance Growing Budget Shortfalls with Infrastructure Needs

by Addison Smith

As municipalities face budget shortfalls, unfunded pensions, and declining revenue streams, city officials are considering public-private partnerships (P3s) to fill financial gaps. Due to municipal autonomy, cities often have their own ability to pursue a P3 even when the state has no P3-enabling legislation. This has expanded the overall P3 market scope and has led to more diverse projects. However, these deals face the same political hurdles at the municipal level that they face at the state level.

While municipalities deal with daunting financial scenarios in the immediate future, city officials currently have the luxury of waiting and shirking responsibility. As we have seen in many cases, the need for upfront money that a P3 can provide to backfill shortfalls and enhance infrastructure is not as urgent as the market would like to think. Even though there are significant looming threats, city officials have a sense that they can punt decisions to future city governmen

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