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U.S. P3 Market is Ripe for Growth

With an aging infrastructure and government budgetary shortfalls, the public private partnership (“P3”) has evolved from novel, to an ever more viable option in order to finance civic projects. The larger and more complex the project, the more attractive P3 becomes as an option projects that may normally be too large or economically unattractive without both private and government involvement to share risks and costs.

P3’s have now arguably reached the critical mass necessary to encourage private companies to design products to address the unique needs of P3’s. For example, to accommodate the continued paradigm shift toward P3 projects, AIG recently created a product to address insurance liability issues unique to P3’s.  Insurance issues are arguably one of the more difficult and nuanced components of P3 projects.  This is just one small but critical example where increased P3 activity is justifying creation of products to support and contribute to the P3 market, thus making each project more efficient than the last.

While P3 results have in the past been slow and choppy, the P3 market in the US in particular shows positive signs of also strengthening in the long-term.  According to a new report by Moody’s Investors Service, the US P3 market demonstrates the potential to be the world’s largest. The potential of the US P3 market is bolstered by three main factors: government support, a strong legal framework and growing financing sources.  In particular, political will and financing are both encouraged by the increased successes of P3 projects.

Moreover, new legal frameworks, including the Fixing America’s Surface Transportation (FAST) Act, are contributing to further stability and predictability for P3 projects. Professional organizations are also doing their part to further the industry. Innovations such as the creation of the Build America Transportation Investment Center (BATIC), are lowering the hurdle to find reliable P3 data, and serve to demonstrate another sign of the maturing P3 market. The BATIC was developed out of the necessity to create a central point of contact for coordination of federal transportation expertise and project sponsors.

While many P3 projects draw on limited project experience, John Medina, Moody’s VP — Senior Analyst says,

“State-level P3 activity has risen over the last three years, and nearly all P3 projects have been completed early or on time.”

His sentiment is echoed throughout US P3 projects. According to a Moody’s Investors Service report, the U.S. market for P3’s is ripe. With continued strengthening of political will combined with continued cooperation between the private and public sectors, the P3 market will only continue grow into the preferred method of financing public projects.

© 2020 Bilzin Sumberg Baena Price & Axelrod LLP

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About this Author

Albert Dotson, Bilzin Sumberg Law Firm, Real Estate and Land Development Attorney
Partner

Nationally recognized for his work on public-private partnerships (P3), Al's experience includes rail and transit facilities, airports, marinas, sports stadiums, convention centers, healthcare/life sciences facilities, educational institutions, water and sewer facilities, and parking structures.

Al is recognized throughout Florida for his work representing local, national, and international clients in responding to government contract solicitations and defending against, or prosecuting quasi-judicial and judicial bid protests.

305-350-2411
Anthony De Yurre, Bilzin, Real Estate Development Lawyer, Investment Strategies Attorney
Partner

Anthony De Yurre is a Partner in Bilzin Sumberg's Land Development & Government Relations Group. His practice focuses on the representation of real estate developers and investors in complex land use and zoning matters with a focus on transit-oriented development, large scale mixed-use development and public-private partnerships.

Anthony is an adjunct professor at the University of Miami Law School Master of Laws (LL.M.) in Real Property Development where he teaches “Problem Solving Large Scale, Mixed-Use Development”.  Upon graduating from Duke University and Vanderbilt Law, Anthony returned home to Miami and became one of only 400 attorneys to also earn a Master of Laws in Real Property Development from the University of Miami.  Anthony is also fluent in Spanish and Portuguese.

 

305-350-2404