Are Public-Private Transactions the Future of Infrastructure Finance?

Public-private partnerships (PPPs) are financing strategies that are widely used around the world but are still relatively new in the United States. However, the increasing demand for infrastructure in the U.S. coupled with the struggle to balance budgets is leading many state and local governments to consider nontraditional sources of financing such as PPPs for their capital and operating needs. This article provides an overview of PPPs, including their structure, benefits, and some things to consider when determining whether to pursue a PPP. Under PPP agreements, state and local governments maintain ownership and control of the assets but receive financial compensation to contract with a private operator who provides operating, maintenance, and/or construction expertise for large-scale infrastructure projects. The benefits include greater upfront proceeds, flexibility with use of proceeds, and strict operating and maintenance standards. Municipalities do need to consider the public policy implications of such arrangements, what authority they relinquish under the PPP model, and the appropriate term of the concession agreement to maximize benefits to both parties. The rapid growth in the PPP market suggests that they will become a prominent fixture in infrastructure finance.

Language

  • English

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 01056100
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 30 2007 11:49PM