The Wait for a Deal: With federal infrastructure policy on hold, state and local P3s are in a bind
- November 1, 2017: Vol. 4, Number 11

The Wait for a Deal: With federal infrastructure policy on hold, state and local P3s are in a bind

by Drew Campbell

Investors have been anticipating the Trump administration’s big push for infrastructure investments in the United States, but their hopes have not been met with action because of the all too familiar Washington gridlock. This has put a lot of government agencies at the state and local levels — as well as the private investment managers hoping to work with them — in a tough spot. They have plenty of projects in need of financing and funding and plenty of design and build firms and investment capital at the ready, but the uncertainty about whether a $1 trillion federal-level infrastructure program will become law has left them waiting to see if they can get a better deal than what is being offered at the moment. If a federal-level infrastructure program might come with grants, loans and subsidies for state and local projects, it makes sense to wait and see.

The gridlock and lack of a federal infrastructure plan is disappointing not only because of the obvious need that much of America’s infrastructure has for both maintenance and new projects, but also because 2016 was in many ways a breakout year for infrastructure public-private partnerships. Real momentum seemed to be building on the strength of several transactions. The Long Beach Courthouse P3, the University of California Merced’s social infrastructure P3 and across the country New York’s LaGuardia Airport and Tappan Zee Bridge P3 projects had many hoping the momentum would carry through to 2017 and beyond. An infrastructure bill combined with the momentum building from these projects could be a springboard for bigger and better things for U.S. infrastructure.

Instead, the lack of clarity in Washington, D.C., has rippled through to the state and local levels, where many public officials in charge of approving infrastructure projects have been waiting to see what happens as projects are on hold.

But the situation is not as fraught as it might seem. Despite the delays and uncertainty, some state and local agencies are in fact moving ahead with P3 projects, and this is in part thanks to the success of the aforementioned projects. Now that many of these have completed or are in the midst of completion, there is a growing track record of large private-investor backed P3 projects that public officials can use to learn how this model works, the benefits and the challenges.

They can and are reaching out to their peers who have completed these projects, and are learning how they were negotiated and structured and why the P3 model was chosen, and whether it makes sense for them to pursue similar deals.

While many are waiting to see if an infrastructure bill will become reality in Washington, D.C., others are moving ahead with or without a federal deal.

Drew Campbell ( is editor of Institutional Investing in Infrastructure.

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