Real Estate

Trump Infrastructure Investment Plan : Public-Private Partnerships (P3s) and Leverage

There has been a lot of talk over the last few months in the AEC industry over the Trump Tax Plan. The plan has received a lot of criticism – all flash and no cash. The administration focused heavily on Infrastructure investment being a critical part of economic improvement, but the plan calls for a shockingly small $200 million. The administration has said their plan is not meant to fund infrastructure, but to create competition and planning at the state and local level to compete for federal dollars and leverage local tax base and public-private partnerships to get projects done.

This leverage is accomplished by lifting restrictions currently constraining ways federal and state agencies can engage private companies over infrastructure. The plan expands grant access and broadens existing Federal credit programs, such as Private Activity Bonds, to include a more diverse range of infrastructure asset improvements to attract more private companies. It also expands agency authority, such as the USACE, to engage in long-term contracts that are conducive to large-scale infrastructure investments.

By and large, this plan enables government agencies to engage private companies over infrastructure projects more freely; to create Public-Private Partnerships (P3). The conditions set by this plan counterbalance low federal funding with incentives, such as Federal credit programs or stable long-term contracts, that attract experts in the private sector. These incentives promise a fair profit for private companies, in exchange for their expertise or financial backing that ensures a project’s completion. These scenarios are a win-win when this exchange is a fair agreement between parties.

Facilitating a win-win scenario isn’t always so easy. MCFA has experience navigating the roadblocks on both sides of Public-Private Partnerships. After procurement and political victories at the initial stages, the devil’s in the detail-oriented later stages of the project. Despite hang-ups, however, MCFA believes that P3’s are worthwhile avenues to explore on any project. This administrations emergent infrastructure plan goes a long way to making those roads a little less bumpy.