Building for the future

As more legislation continues to be passed in the US, the P3 market is riding the crest of a wave. Dan Colombini speaks to Plenary chairman Dale Bonner about why 2014 could be a watershed year for the industry

Have you made any significant ground on the projects that Plenary is currently involved in?
Yes, we expect to achieve financial close on the US 36 project in Colorado soon, and we’re pleased to be shortlisted on the SH 183 in Texas, the I-69 in Indiana, and the Portsmouth project in Ohio. We’re prepared for a very busy year in 2014.

There has been some discussion on the US water sector as we approach 2014. What will be key for investors looking into the water sector going forward and can you foresee opportunities as we have seen in transport?
The recent closing of the Rialto water deal was seen as a very positive development, but hardly represents real traction in the water sector. We’re likely to see an uneven pipeline and continuing political challenges to water deals.

The proposed Sustainable Water Infrastructure Act (HR 1802), introduced in the House of Representatives, would effectively lift the current cap on tax-exempt private activity bonds that can be issued by private investors in state water systems. This could encourage billions of dollars of private investment in water supply and wastewater systems around the country.

How do you view the US market on a wider scale and what new opportunities do you predict will open up next year?
Many expect 2014 to be another watershed year as projects move forward in California and Nevada in the west, and Texas, Virginia, Indiana, Florida and other states across the country. There needs to be continuing efforts to make sure public sector decision makers have good data and arguments for considering and using P3 delivery methods.

Given the sheer size and value of US transportation projects, what are the greatest challenges in funding and procuring such deals?
With the federal MAP-21 authorization bill set to expire, the greatest challenges will be securing additional public funding for transportation and increasing the efficiency and long-term stability of the TIFIA program.

What are the key challenges of making the switch from the public to private sector, as you have done?
If you’re asking personally, the key challenge is appreciating how the public and private sectors measure and value time differently. The private sector is highly motivated and well positioned to act with a greater sense of urgency.

While many more public agencies are now motivated to innovate, they are hampered by political indecision and growing competition for fewer public resources.

Do you believe that the USA is moving away from its status as an emerging P3 market?
I think it’s too early to say. While it’s encouraging to see more P3 legislation being enacted across the country, the political will and public sector capacity to use the new tools are now being tested. We won’t really know how well the market is maturing until we see how recent projects perform and how the current pipeline progresses.

You recently co-chaired P3 Bulletin’s latest event in Los Angeles. How does California compare with other areas in the US in terms of P3 projects and procurement, and what will investors be looking at as we approach 2014?
With almost 10% of the nation’s population, California faces tremendous needs for investment in all sectors. Having successfully closed the Presidio Parkway and the first social P3 in the US (the Long Beach Court House), investors will be watching to see if [public procurement bodies] Caltrans and LA Metro move forward with the ARTI [Accelerated Regional Transportation Improvements] procurement in a timely and efficient manner.